Alibaba’s stock blues

Business & Technology

Alibaba’s stocks plummeted all over the globe. At such cheap prices, should wary investors cash in?

Will Jack get the last laugh? Illustration for The China Project by Derek Zheng.

Last Friday, Alibaba’s stock hit its lowest point on the NYSE since 2017 and fell to its cheapest price ever on the HKSE. Down nearly 70% from its Hong Kong peak, Alibaba dipped 5.7% on Friday, most likely due to its sizable exposure to Russia amid ongoing economic sanctions. On the New York market, shares dipped below the $100 mark after falling 58% on the year.

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Facing regulatory hurdles, heightened competition, and declining revenue growth, investors have largely soured on Alibaba’s stock. The nosedive began with the suspension of Alibaba’s fintech subsidiary, Ant Group, followed by the regulatory assault that has roiled China’s markets.

  • Intense competition has shrunk Alibaba’s ecommerce market share from 78% in 2015 down to 51% last year. Pinduoduo has surpassed Alibaba in active users and has adopted game-like elements into its shopping platform. Tencent-backed has raised billions in recent IPOs and incorporates online stores into WeChat.
  • Alibaba’s 2021 fourth-quarter revenue growth increased 10% from the year prior. This is the company’s lowest quarterly growth year-on-year.

Should investors buy the dip?

  • Daniel O’Keefe, managing director at Artisan Partners, a global investment firm, recently remarked that Alibaba is one of the cheapest stocks he has ever seen for a “business of that quality and financial strength.”
  • American billionaire Charlie Munger recently doubled his stake in Alibaba, bringing his total hold to 602,000 shares with a market value of $80 million.