Alibaba (BABA) Stock Research

Overview

Alibaba Group Holding Ltd (BABA) is a Chinese e-commerce giant. It operates retail and wholesale marketplaces connecting small businesses and consumers. Alibaba's platforms include Taobao, Tmall, Alibaba.com, AliExpress, and Alimama.

Recent Stock Price Performance

Alibaba's stock price has declined sharply from all-time highs, falling around 75% from October 2020 highs of around $310 to current levels of $80. The sell-off has been driven by several factors.

Potential Reasons for the Downtrend

• Increased regulatory scrutiny in China - Chinese regulators have launched anti-trust investigations and fined Alibaba $2.8 billion. There are concerns over government intervention going forward.

• China's economic slowdown - Lockdowns, supply chain issues, and the real estate crisis have negatively impacted consumer spending and the overall economy.

• Delisting fears - The U.S. SEC has identified Alibaba as a company potentially subject to delisting under the Holding Foreign Companies Accountable Act.

• Competition from Pinduoduo - Pinduoduo has gained share in China's e-commerce industry, challenging Alibaba's dominance.

Valuation Metrics

• P/E Ratio: 9x (vs 5-year average P/E of 28x)
  • P/S Ratio: 1.9x
  • P/B Ratio: 1.5x

Valuation appears very attractive relative to historical levels. The stock is trading near multi-year lows on a P/E basis.

Final Thoughts

Alibaba faces strong regulatory headwinds but the risk-reward profile appears favorable for long-term investors at current valuations. Alibaba retains strong competitive advantages, including its massive user base and extensive logistics/cloud infrastructure. The company is shareholder-friendly, buying back stock and paying a growing dividend. If regulatory issues ease in the future, the stock could see significant upside.