2024-04-15 09:00:43 ET
Summary
- BABA's stock has lost its 2022/ 2023 gains while trading sideways, with the massive share repurchases/ dividend payouts barely moving the needle.
- With the restructuring yet to produce any results, we can understand why the consensus forward estimates appear to be underwhelming, worsened by the intensified domestic cloud/ e-commerce competition.
- Despite the underwhelming performance, BABA's Free Cash Flow generation remains robust, allowing the management to continually grow shareholder equity.
- With the stock's valuations overly discounted, we may see it offer an excellent upside potential over the next few years upon an eventual re-rating.
We previously covered Alibaba Group Holding Limited ( BABA ) in November 2023, discussing its excellent CQ3'23 performance in the Cloud and e-commerce segments, since we believed these two segments might be the company's long-term growth drivers.
We had also added a small position then, with us believing that the summit between Biden and Xi was likely to thaw market sentiments surrounding Chinese ADS, especially with the stock already nearing its lowest-ever recorded P/E valuation of 8.30x....
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For further details see:
Alibaba: $4.8B Buyback Did Not Move The Needle - What's Next?