Alibaba (BABA) could bet the best value stock in ecommerce. To explain, Alibaba reported quarterly revenues of $30.975 billion on 30 September 2021.
Yet, Mr. Market paid $123.23 a share for Alibaba Group Holding LTD (NYSE: BABA) on 21 January 2022. In contrast, Mr. Market paid $2,852.86 for Amazon (AMZN) on the same day.
I consider Alibaba a value investment because its revenues and ecommerce are growing while the stock price falls. For example, Alibaba’s share price fell from $243.46 on 15 January 2022. Conversely, Alibaba’s quarterly revenues grew from $22.413 billion on 30 September 2020 to $30.976 billion on 30 September 2021. Moreover, Alibaba’s quarterly gross profit grew from $8.993 billion on 30 September 2020 to $10.501 billion on 30 September 2021.
Alibaba is growing fast
Additionally, Alibaba’s ecosystem is growing fast. For example, the number of active Alibaba customers grew from 757 million in the third quarter of 2020 to 863 million in the third quarter of 2021, Statista estimates.
In comparison, Amazon Prime had 153 million subscribers in the United States in July 2021, Statista estimates. Moreover, Amazon Prime had 200 million subscribers worldwide at the end of 2020, Statista estimates.
Conversely, Markinblog ranked Alibaba (BABA) as the world’s third largest ecommerce company with annual revenues of $71.99 billion in September 2021. To elaborate, Markinblog named Amazon, the largest ecommerce company with quarterly revenuers of $386.06 billion, and JD.com, the second largest ecommerce company with quarterly revenues of $114.97 million.
Thus, Alibaba is cheaper than Amazon, and its price is falling. Yet Alibaba is growing and making more money. For example, Alibaba’s quarterly operating income grew from $2.008 billion on 30 September 2020 to $2.329 billion on 30 September 2021.
I think those are value characteristics. Alibaba’s other value characteristics include being cash.
How Much Cash Does Alibaba Generate?
Alibaba (BABA) can generate amounts of cash. For example, the company reported a quarterly operating cash flow of $5.571 billion on 30 September 2021. The quarterly operating cash flow fell from $8.285 billion on 30 September 2020 and $16.441 billion on 31 December 2020.
Incredibly, Alibaba reported a quarterly ending cash flow of $50.899 billion on 30 June 2021. However, the quarterly ending cash flow fell to -$2.598 billion on 30 September 2021.
Impressively, Alibaba’s cash and short-term investments grew from $60.303 billion on 30 September 2020 to $77.045 billion on 30 September 2021. Appealingly, Alibaba’s cash exceeds it debt. Alibaba’s total debts grew from $17.882 billion on 30 September 2020 to $25.467 billion on 30 September 2021.
Therefore, Alibaba is a cash rich company with a growing customer base.
What Value Does Alibaba have?
Alibaba (NYSE: BABA) has enormous value that is growing. For example, Alibaba’s Total Assets grew from $201.506 billion on 30 September 2020 to $266.867 billion on 30 September 2021.
Yet, Alibaba’s stock price is falling because of news stories about founder Jack Ma’s disappearance and Chinese President Xi Jinping’s crackdown on tech companies. To explain, I think non-Chinese are selling BABA shares because they fear the Chinese government will seize or destroy the company.
I think pundits exaggerate such fears. To explain, I cannot imagine Xi or anybody else in the Chinese Community Party killing the engines that drive their nation’s prosperity and growth.
No Xi Jinping does Not Hate Alibaba
Furthermore, I think Chinese authorities went after Ma because of his FinTech company Ant Group. I think authorities were afraid Ma was about to unleash dangerous financial technology that could disrupt the economies of many countries. Hence, they pulled the plug on Ant’s initial public offering (IPO).
For example, they were afraid Ma was offering ordinary people access to uninsured bank accounts and questionable investments. The fear was Ant Financial could run out of money, meltdown, and stick the People’s Bank of China with the bill. Hence, Chinese authorities were trying to prevent a larger and more catastrophic financial collapse than the 2008 meltdown.
Note: this version of events rarely appears in American media. I suspect business leaders want no coverage of the Ant crackdown because they fear Americans will demand similar crackdowns on US business.
Is Alibaba a Value Investment?
If you are seeking a value in Chinese stocks, I think Alibaba (BABA) is worth investigating. The e-commerce giant is growing and generating enormous amounts of cash.
If you have no moral or political objections to the Chinese government, Alibaba is an interesting value investment.