r/stockmarket
Is Alibaba(BABA) free money right now or a leading indicator of what's to come in US stocks?
Author argues BABA is an incredible bargain, trading at 2x net profit with $75B cash, down 50% from ATH.
- BABA is trading at a massive discount, down 50% from its all-time highs.
- The stock offers an incredible bargain with a 2x net profit multiple.
- A third of the company's market cap is backed by $75B in pure spendable cash.
Alibaba is down 50% from ATHs from just October. It is one of the purest cash cows on the NYSE. It has surpassed $1T in total revenue over the past year and is printing right around $105B in Net income with a current market cap of $227B.
It has has taken a hit to its income compared to the prior years report but that can mainly be attributed to the anomalously huge prior year it had. The most recent year's numbers fall right back in line with the company's long term growth trend. Alibaba is also sitting on about $75B of cash(USD) right now. That means approx one-third of the company's market cap is pure spendable cash sitting in the bank.
How is having an opportunity to buy a Behemoth like Alibaba at just a 2x multiple of it's Net Profit while sitting on $75B in cash not an incredible bargain
While I agree BABA is undervalued, you need to be careful with your numbers because for some reason google randomly throwns yuan into the mix.
They have a market cap of 227B USD, but their net income is 100B YUAN which is only 15B USD.
Which means they make about 7x less money than you think they do.
I hope you know that there’s a difference between USD and CNY/RMB
What about FXI touching 52 week lows
Dvlt has till late august to be compliant with nasdaq. Either reverse split or delist but that’s in August. The entire month of July is an opportunity for us to print $$$
Dvlt is at a low of .33. When everyone invests it’s an .86 stock. Lots of room to print $$$ plus an easy way to double your investment.
Go grab your free money and let us know how it went
At the end of 2020, BABA was trading for an unjustifiable P/E >50 and a P/S approaching 10.
Now the P/E is less than 15 and the P/S is under 1.5, but the risk is its capex crushing its FCF, just as it is with the US hyperscalers.
Bro, for this particular stock idgaf about the numbers. It's a hot potato and I'm glad I didn't hold it for long.
Yeah I thought it's a deal at 130, sold at 120. Glad I did and I'm not touching Chinese stocks
I would love to see a percentage of investors who have held this stock at some time (and made little or no money from it). It's a phase we have all had it seems haha.
The "1T" total revenue and "105B" net income you cited are in Yuan (not USD). That translates to \~$140B USD in trailing revenue, and about $15B USD in net income.
After learning the hard way I never tough China stocks. Their regulatory body can cause company valuations to drop like a rock.
Exactly this. Once thought diversifying with some china stock was a good idea. Hell nah. Valued completely different and mostly go sideways if not badly damaged by regulation or trade wars.
My NIO shares agree.
Oh wait lol. Nio is down the drain. Nvm.
Every rule has it's exceptions. Baba not one of them.