Alibaba: A Qualitative Breakdown Of $500 Billion In Disappeared Market Cap

Natalie Koo
576 Followers

Summary

  • BABA has lost two-thirds (>$500 billion) in market cap since its peak in late 2020.
  • This article will break down the lost $500 bn into qualitative components:(i) lower profitability, (ii) slower growth, and (iii) higher risk premiums / required rates of returns by investors.
  • Current market valuations are effectively assuming these effects will persist into perpetuity.
  • Out of the three, lower profitability is likely reflective of a structural shift, but the other two may prove temporary and could change with time.
Yahoo Takes 40 pct Stake in China"s Alibaba

Guang Niu

NYSE:BABA has lost two-thirds (>$500 billion) in market cap since its peak in late 2020. This article will review the tangible economic effects of the SAMR’s anticompetition policies on BABA’s business performance, including: (i) lower profitability, (ii) slower growth and (iii) higher risk premiums / required rates of returns by investors. Current market

This article was written by

576 Followers
Currently a valuation professional in an economic and financial consulting firm. Previously an analyst at a Hong Kong based long short equity fund with fundamental driven investment approach and emerging market focus.  Always happy to connect and exchange ideas.  Please feel free to reach out to me at nat.koo@gmail.com

Analyst’s Disclosure:I/we have a beneficial long position in the shares of BABA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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