2024-06-11 09:00:00 ET
Summary
- Alibaba's share performance has been disappointing, but there are opportunities for long-term investment due to growth potential and favorable policy shifts in China.
- There are risks to investing in Alibaba, including the possibility of delisting, an unfriendly business environment in China, and potential accounting discrepancies.
- The operating landscape in China is improving, with new capital market policies, support for the real estate sector, and projected GDP growth, which could benefit Alibaba's cloud services and AI initiatives.
Alibaba's ( BABA ) share performance has been disappointing over the past several years as some investors are adamant about staying clear of Chinese investments while others, such as myself, look at the numbers and see opportunities. Every bear case has been thrown at BABA, including speculation about shares being delisted, an unfriendly environment toward business in China, and a slowdown in GDP growth for the Chinese economy. Shares of BABA have lost -15.82% of their value since going public in 2014 despite drastically growing their top and bottom lines. Over the past year, BABA reached new lows as shares hit $66.63 at the beginning of 2024, and even though shares have retraced a bit over the past month, it looks like a bottom may have formed. I think there is still a long-term opportunity in BABA, and I will be looking to lower my cost basis during the summer. I believe that the fears are overblown as the shift in policy from China and BABA's numbers could propel it into a more realistic valuation. There are certainly risks to my investment thesis, but if global economic growth and increased dependency on cloud services continues BABA should be a direct beneficiary, and eventually, I think more investors will turn bullish on the investment case....
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Alibaba: Deep Value As Things Are Looking Better In China