Stock: BABA
Rating: Buy
Author: Waleed M. Tariq
Background
- BABA was formerly a strong growth stock, but its stock has suffered since Jack Ma’s speech last year.
- In addition to China’s slowing economy, the CCP and Chinese mega-companies are to blame.
- The business was fined $2.8 billion this year for violating Chinese antitrust regulations.
Bullish
- Despite uncertainty and political challenges, the company has grown and expanded.
- Considering the company’s worst year on the NYSE, it’s good that it’s taking long-term steps to boost shareholder value.
- The company’s dirt-cheap stock delivers tremendous long-term rewards.
Bearish
- The business was fined $2.8 billion this year for violating Chinese antitrust regulations.
- Ali Baba works in restricted categories and cannot directly sell shares to international investors.
China’s VIE prohibition
- China may outlaw VIE-based securities by modifying legislation to prevent SPVs from owning the VIE company.
DiDi’s Delisting
- Chinese investors are concerned about the delisting of a large Chinese corporation from the NYSE to the Hong Kong stock exchange. It could be the first of many.
End of a Tough Year
- Despite uncertainty and political challenges, the company has grown and expanded. The company’s 3-year CAGR is 42% and 5-year CAGR is 46.2%. 20-23% growth is projected for 2022.
Conclusion
- China and the US are working to find a solution, therefore BABA stock may stay volatile. This stock is risky for short-term investors.