2024-05-03 02:46:00 ET
Summary
- Alibaba's latest financial and operating numbers show missed targets and weakening free cash flow generation.
- The cancellation of the cloud spinoff and postponed spinoff plans for other business units have added to internal problems.
- Despite these issues, there are reasons to believe Alibaba's stock price may reverse and experience a recovery in the near term.
- Jack Ma is trying to inspire hope - against the backdrop of an oversold and still lagging Chinese tech market, this presents an opportunity for BABA's massive growth.
- As in February, i.e. about 3 months ago, I've decided today to rate BABA as a "Hold". But at the same time, I note that the probability of the recovery rally continuing has increased.
Intro & Thesis
If you read my articles regularly, you probably know that I'm very skeptical about buying shares in Chinese companies in the long term - I'm particularly put off by the well-known VIE structure and the authoritarianism of the CCP that's limiting China's growth prospects, in my view. It was the combination of these factors that did not allow me to upgrade Alibaba Group ( BABA ) stock back in February 2024 when information about the purchase of the stock by co-founders Jack Ma and Joe Tsai appeared on the market. By the way, since then, the BABA has risen by 4.63%, slightly outperforming the broad market:
Seeking Alpha, the author's coverage of BABA stock
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For further details see:
Alibaba Stock May Reverse Massively