BABA - Alibaba: Nothing Has Changed To Make Buys Compelling
2024-06-14 07:34:35 ET
Summary
- I have been skeptical of buys on Alibaba. It looks like this view has been accurate so far; since my last update, BABA has lagged the SPY by 12.13%.
- Revenue growth is still lackluster, particularly in the most relevant segment of China Commerce, due to a reduction in take rates and customers' preferences for lower-priced items.
- I had mentioned margin expansion upside as a key upside risk in my last update. But this is not playing out so far, except in the Cloud Business.
- Valuations, of course, continue to be low, but I believe this is insufficient as I require a strong sales rebound catalyst to justify fresh buys.
- Major investors continue to be bullish on Alibaba, including David Tepper's fund, which now has the stock as its largest holding. But I prefer to not fight the bearish trend until it starts to turn.
Performance Assessment
Performance Since Author's Last Update on BABA (Author's Last Article on Alibaba, Seeking Alpha)