Alibaba (BABA) - the stock price has been pulled down by fear about regulation, delisting, and most recently instability in China as it’s zero covid policy fails. However, as far as I can tell, the price is insanely low for the amount of revenue Alibaba generates and the market share that it holds in China.
Your observations about fear and the revenue and market share are information which have been visible to the entire world for months or years now. Why do you think you have inside information on that?
Other questions come to mind: How much will BABA be worth if the techlash continues and Xi decides to outlaw, say, not video games or tutoring this time but advertising? Or if Ma is unpersoned? How much would it be worth to you, as a foreigner, if Xi decides to ‘pull a Putin’ and invade Taiwan and similar sanctions trigger? etc.
I of course don’t have insider information. My stance is something close to Buffett’s advice “be fearful when others are greedy, and greedy when others are fearful”. I interpret that as basically that markets tend to be overly reactionary and if you go by fundamentals representing the value of a stock you can potentially outperform the market in the long run. To your questions, yes disaster may really occur, but my opinion is that these risks are not sufficient to pass up the value here. I’ll also note that Charlie munger has been acquiring a substantial stake in BABA, which makes me more confident in its value at its current price.
Alibaba does looks cheap, with a PE ratio of 15, and probably likely to grow faster than the S&P 500.
However, I am not sure why the market would be wrong about the risks of delisting, regulation and instability in China.
I think one not obious advantage with Alibaba is that it’s one of the strongest AI companies in China, and China is investing a lot in AI, and might (not sure how likely) become the biggest player in AI globally.
Alibaba (BABA) - the stock price has been pulled down by fear about regulation, delisting, and most recently instability in China as it’s zero covid policy fails. However, as far as I can tell, the price is insanely low for the amount of revenue Alibaba generates and the market share that it holds in China.
Your observations about fear and the revenue and market share are information which have been visible to the entire world for months or years now. Why do you think you have inside information on that?
Other questions come to mind: How much will BABA be worth if the techlash continues and Xi decides to outlaw, say, not video games or tutoring this time but advertising? Or if Ma is unpersoned? How much would it be worth to you, as a foreigner, if Xi decides to ‘pull a Putin’ and invade Taiwan and similar sanctions trigger? etc.
I of course don’t have insider information. My stance is something close to Buffett’s advice “be fearful when others are greedy, and greedy when others are fearful”. I interpret that as basically that markets tend to be overly reactionary and if you go by fundamentals representing the value of a stock you can potentially outperform the market in the long run. To your questions, yes disaster may really occur, but my opinion is that these risks are not sufficient to pass up the value here. I’ll also note that Charlie munger has been acquiring a substantial stake in BABA, which makes me more confident in its value at its current price.
Alibaba does looks cheap, with a PE ratio of 15, and probably likely to grow faster than the S&P 500.
However, I am not sure why the market would be wrong about the risks of delisting, regulation and instability in China.
I think one not obious advantage with Alibaba is that it’s one of the strongest AI companies in China, and China is investing a lot in AI, and might (not sure how likely) become the biggest player in AI globally.