Alibaba Group Holding Limited

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.