Alibaba Group is a Chinese multinational technology company that specializes in e-commerce and retail internet. It was established in 1999 by Jack Ma and has had significant success in the Chinese Market.
Its 10 year compound annual growth rate (CAGR) has been staggering:
Revenue : 59.9%
Assets: 59.7%
FCF: 57.1%
EPS: 66%
This is what has caught my eye, its current market cap is at around $430 billion, and lets assume with a CAGR of 16 % going forward, that would value Alibaba ($BABA) at over $707 billion. This means from current levels there is a 39% margin of safety on offer.
It’s no wonder Charlie Munger continues to buy Alibaba for the long term.
TIME TO GO ALL IN?
For those familiar with the story, You’d know China has been playing hard ball and cracking down on multiple industries - such as education and big tech. Alibaba has, unfortunately or fortunately, been a causality of these regulatory changes and shift in sentiment.
This leaves me with one question, is it time to go all in?
Alibaba Group has fallen from its high off $318 to a low of $137 (57% drop) - Ouch! Subsequently, it has recovered slightly from that low of $137, as of Friday the 8th October, to $161 (17.5% increase).
Has the market realized that Alibaba is here to stay, and in fact may be one of the safest bets going forward, especially in a market where everything seems to be overvalued?
I’ll leave that up to you to decide :)
For a more detailed analysis on Alibaba Group, you can check out this detailed researched tweet below.
Stay safe, everyone
See you next week :)