$BABA (Alibaba) is down 9% today on news that the “quarterly sales missed Wall Street expectations, raising concerns that the company is showing signs of a slowdown in growth”. (ibtimes, http://is.gd/QQUChZ).
I’m actually a little surprised by this. I figured that they’d be able to juice the revenues to beat them. I was wrong.
On 21 January 2015, I reported (“$BABA Alibaba – the madness of crowds” http://is.gd/sDoG2o) that I thought the company was way overvalued at $103.29, and questioned the legitimacy of their growth rates and business practises. I also expected, but didn’t state, that the market would blithely ignore what I considered to be warning signs and carry on regardless. It didn’t work out like that, though.
The stock has actually had some downward momentum since Novmber 2014. Given the market reaction right now, I’d say that these were going down a lot further before any kind of bottom is reached.
I still don’t think the market is asking the right questions, though. Their acquisitions seem completely undisciplined to me, and I think Jack Ma is too much in love with himself.
Comparing 3 m/e Sep 2014, their revenues were up 54% over comparable period a year before, whilst operating income is down 17.2%.
All the signs are there.
Thank goodness Yahoo have the sense to spin off their holdings in BABA. I wonder what the arbs will make of it.
We’ll all be talking about BABA for years to come.