Negative: Alibaba faces challenges in China, underperforms compared to competitors, may not fully recover soon.

From Seeking Alpha: 2024-06-20 14:00:00

In recent years, Alibaba has struggled due to political risks in China and deteriorating Sino-American relations. Despite Q4 revenue growth, the company faces competition from newcomers like Pinduoduo and weakening market dominance. With its cloud business also underperforming and overall limited growth catalysts, Alibaba may not fully recover soon.

The lack of major growth catalysts, ongoing CCP crackdown, and weakening market dominance have led to Alibaba underperforming compared to international competitors like Amazon and Microsoft. While fundamentally undervalued, the company faces challenges in creating meaningful shareholder value and justifying a long position at this stage.

Despite trading at lower multiples and being undervalued, Alibaba’s weak momentum and lack of growth make it a potentially risky investment. The company’s strong fundamentals are overshadowed by the rise of domestic competition, geopolitical risks, and China’s decreasing attractiveness to foreign investors. This suggests that Alibaba may be more of a value trap than a buying opportunity at this time.



Read more at Seeking Alpha: Alibaba: China Remains Uninvestable (NYSE:BABA)