To be more precise, its forward P/S and P/E multiples have shown a gradual compression over time. For its Fiscal 2023, which ended this past March, Alibaba reported revenues of $126.5 billion! The company’s net income also has expanded from $3.7 billion to $10.6 billion during this period.Īlibaba’s Valuation Gap Has Been WideningĬlearly, Alibaba’s growth in revenues and profits against a stagnated stock price has resulted in an ever-widening valuation gap. Specifically, in Fiscal 2014, Alibaba reported revenues of $8.45 billion. The stock may still be trading at the same levels it did back in 2014, but its revenues have grown by a massive 15x during this time. That said, outside of the politics and drama involved, Alibaba’s actual performance has been nothing short of impressive. This has been the most prominent reason for the stock’s protracted underperformance.ĭo you remember back in November 2020 when Chinese regulators halted the IPO of Alibaba’s financial affiliate Ant Group due to unease over regulatory compliance only after Alibaba founder Jack Ma criticized China’s regulatory system? Or how about when Jack Ma ended up disappearing for months, a while after? Investors don’t want to have anything with such foreign-related drama, which is why many avoid touching the stock with a 10-foot pole. Over the years, Alibaba has found itself in a very shaky geopolitical landscape. Persistent Growth Despite Geopolitical Concerns While there are certainly some risks attached to Alibaba’s investment case, it has become increasingly hard to ignore this potential opportunity. As a result, the stock’s undervaluation gap has been slowly enlarging. In fact, Alibaba stock is still trading at the same levels it did back in 2014 when it IPOd on the NYSE.ĭespite Alibaba shareholders experiencing virtually no gains for nearly a decade, the company has been growing its operations, revenues, and profits. That said, shares have yet to catch up with Alibaba’s financial developments, still trading at the low end of their five-year range. At $91.90, shares have certainly rebounded notably from their 52-week low of $58. Alibaba stock ( NASDAQ:BABA) could present a compelling buying opportunity prior to reporting its fiscal Q1 results, with its valuation currently hovering at rather depressed levels.
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