Followers | 689 |
Posts | 143817 |
Boards Moderated | 35 |
Alias Born | 03/10/2004 |
Tuesday, September 25, 2018 9:12:25 AM
By: InvestorPlace | September 24, 2018
Uncertainty and external pressure will be a tough mix for Alibaba stock
Alibaba (NYSE:BABA) looks absurdly cheap at the moment. Alibaba grew revenue 58% year over year in fiscal 2018 (ending March), and non-GAAP earnings per share surged by 40%. Margins were pressured in the first quarter, admittedly. But the top line still rose 61%. Yet BABA stock now trades at just 21 times forward EPS — and BABA stock has fallen 22% from its 52-week high.
Obviously, there are external factors. Chinese stocks are in a bear market. Trade war fears continue to accelerate. By the standards of China’s tech leaders, Alibaba stock actually hasn’t had a bad year. BABA stock may be down 22%, but rival JD.com (NASDAQ:JD) has fallen 48%. NetEase (NASDAQ:NTES) and Weibo Corp (NASDAQ:WB) both are down 40%+.
But there are concerns surrounding Alibaba stock itself. As I wrote last month, BABA stock simply isn’t as cheap as it looks. That’s true even after another 10% decline.
And, in the near-term, Alibaba stock could face more pressure. External concerns aren’t abating — and, for several reasons, BABA stock could face an outsized impact. Long-term, the recent weakness could just be a blip in the road. But, right now, I’m not quite ready to go flying into BABA stock just yet.
The Uncertainty Problem for Alibaba Stock
Nervous investors generally run from uncertain stocks. And, as impressive as the Alibaba story is, there’s still quite a bit of uncertainty here.
Many investors remain skeptical about the company’s accounting. The same is true for the country as a whole. Alibaba continues to execute complex joint venture transactions that raise eyebrows. As MarketWatch pointed out, a recent reorganization of its money-losing Koubei JV allowed the company to book a gain. Alibaba gave up control of a partnership in Russia and has taken in quite a bit of cash in similar deals over the years despite the fact that internal cash flow should, in theory, fund many of those investments.
Alibaba quite clearly is not a fraud, but there are issues of trust surrounding its numbers (including the impact of “brushing” on its GMV, or gross merchandise volume, figure). Add to that the VIE structure (BABA shareholders don’t actually own shares of Alibaba) and there are reasons for caution here — at least.
Fundamental concerns aside, there’s also a notable change in the business. Founder and chairman Jack Ma is leaving the company. Surely, Alibaba will persist — but one can imagine that investors wouldn’t be thrilled if Jeff Bezos left Amazon.com (NASDAQ:AMZN) or Mark Zuckerberg left Facebook (NASDAQ:FB). (The latter example may not hold at the moment, admittedly.) Ma’s departure is just one more reason why cautious investors may desire a cheaper price before buying the dip in BABA stock.
Are There Better China Plays Than BABA Stock?
Even if Alibaba stock is near a bottom, the next question is whether BABA is the best play on the thesis that Chinese stocks, on the whole, have fallen too far. For these reasons, and others, I’m not sure it is.
I look foolish for my continued recommendation of JD, for instance, but I still think that stock has real potential in the long run. NTES also looks intriguing here. iQiyi (NASDAQ:IQ), the so-called Netflix (NASDAQ:NFLX) of China, offers high reward with its high risk.
BABA admittedly is cheaper than those smaller China plays. And investors looking to buy the dip in China may prefer to do so via the largest players — either Alibaba stock or that of Tencent (OTCMKTS:TCEHY). Certainly, BABA at $165 is intriguing — and there are many worse plays in what looks like an overheated global equity market.
But intriguing isn’t quite compelling — and $165 isn’t necessarily the bottom. With news on the trade war, currency and macro fronts unlikely to reverse any time soon, the uncertainty surrounding Alibaba isn’t coming to an immediate end. And the same may be true for the pressure on Alibaba stock.
https://investorplace.com/2018/09/baba-stock-could-get-even-cheaper/
• DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
Recent BABA News
- AIG names new CFO; Progyny Drops 24% After Losing Key 2025 Contract; Exicure Jumps 190% With Nasdaq Extension • IH Market News • 09/19/2024 10:26:48 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 09/13/2024 08:01:58 PM
- Apple Loses EU Dispute; Google’s $2.7 Billion Fine Upheld; Oracle Shares Surge 9% • IH Market News • 09/10/2024 10:02:31 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 09/06/2024 08:00:22 PM
- Broadcom Down 10% Post-Earnings, UiPath Up 8%; Qualcomm Eyes Intel Assets; Salesforce Acquires Own Company • IH Market News • 09/06/2024 11:59:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 09/05/2024 08:01:03 PM
- Alibaba.com Unveils Game-Changing AI Sourcing Agent, Helping SMEs Simplify Global Trade • PR Newswire (US) • 09/05/2024 06:00:00 PM
- Alibaba.com and Mastercard Team up to Launch U.S. Co-Branded Business Credit Card Powered by Cardless • PR Newswire (US) • 09/05/2024 06:00:00 PM
- Qualcomm Develops Mixed Reality Glasses; Verizon to Boost Dividend, Eyes Acquisition; Samsonite Plans US Dual Listing • IH Market News • 09/05/2024 10:11:35 AM
- Alibaba International Wraps Up 2024 Global E-Commerce Challenge, Highlighting Youth Innovation • PR Newswire (US) • 09/04/2024 01:34:00 PM
- Alibaba International Wraps Up 2024 Global E-Commerce Challenge, Highlighting Youth Innovation • PR Newswire (US) • 09/04/2024 01:13:00 PM
- High Volatility Expected in Nvidia Report, Ambarella Soars 20%, Hertz Strengthens Board, Apple Cuts Jobs • IH Market News • 08/28/2024 09:50:36 AM
- Cruise and Uber Join Forces for Robotaxis, Alibaba Shifts Primary Listing to Hong Kong, Altria Hikes Dividend 4.1% • IH Market News • 08/23/2024 12:20:26 PM
- Alibaba Group Announces June Quarter 2024 Results • Business Wire • 08/15/2024 10:30:00 AM
- U.S. Futures Rise on Easing Inflation, Oil Prices Rise • IH Market News • 08/15/2024 10:09:48 AM
- Google Forced to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- Google Mandated to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- Form 13F-HR - Quarterly report filed by institutional managers, Holdings • Edgar (US Regulatory) • 08/14/2024 08:03:09 PM
- Starbucks Rises 3%; Disney Unveils New Films and Expansions; Uber CEO Questions Tesla Robotaxi Viability, and More • IH Market News • 08/12/2024 09:46:16 AM
- TSMC July Revenue Surges 45%, Nasdaq Accelerates Penny Stock Delistings, Moody’s Downgrades Intel to BAA1, and More • IH Market News • 08/09/2024 09:44:44 AM
- Alibaba Group Will Announce June Quarter 2024 Results on August 15, 2024 • Business Wire • 08/02/2024 09:00:00 AM
- Apple Delays AI Features, Abbott Shares Plunge 7% After $495M Fine, Philips Soars 10% • IH Market News • 07/29/2024 10:24:10 AM
- NBA Signs $77 Billion Broadcast Deal, CrowdStrike Criticized for Insufficient Reward, Honda Shuts Down Chinese Factory • IH Market News • 07/25/2024 10:15:46 AM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM