Alibaba: The Early Stage Of Returning Bullish Sentiment?

seekingalpha10-13

Alibaba - like many other Chinese stocks - saw its stock price jump, but the reason cannot really be found in the quarterly results.The reason is rather a sentiment shift, and Alibaba is a perfect ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

CaseyLKC
10-13
CaseyLKC
Great

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2474048918?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2024-10-13 08:01","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2474048918","market":"sg","top_or_hot":-1,"title":"Alibaba: The Early Stage Of Returning Bullish Sentiment?","media":"seekingalpha","content":"<div>\n<p>Alibaba - like many other Chinese stocks - saw its stock price jump, but the reason cannot really be found in the quarterly results.The reason is rather a sentiment shift, and Alibaba is a perfect ...</p>\n\n<a href=\"https://seekingalpha.com/article/4726250-alibaba-the-early-stage-of-returning-bullish-sentiment\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: The Early Stage Of Returning Bullish Sentiment?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: The Early Stage Of Returning Bullish Sentiment?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-13 08:01 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4726250-alibaba-the-early-stage-of-returning-bullish-sentiment><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Alibaba - like many other Chinese stocks - saw its stock price jump, but the reason cannot really be found in the quarterly results.The reason is rather a sentiment shift, and Alibaba is a perfect ...</p>\n\n<a href=\"https://seekingalpha.com/article/4726250-alibaba-the-early-stage-of-returning-bullish-sentiment\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0797268264.HKD","symbol_name":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (HKD) ACC","start_time":0,"source_url":"https://seekingalpha.com/article/4726250-alibaba-the-early-stage-of-returning-bullish-sentiment","article_id":"2474048918","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2474048918","pubTimestamp":1728777713,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Alibaba - like many other Chinese stocks - saw its stock price jump, but the reason cannot really be found in the quarterly results.The reason is rather a sentiment shift, and Alibaba is a perfect exa","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0797268264.HKD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (HKD) ACC","BABA":"阿里巴巴","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","BK4504":"桥水持仓","LU1688375341.USD":"贝莱德中国灵活股票基金","BK4548":"巴美列捷福持仓","LU0918141887.USD":"安联亚洲实际收益股票基金","IE00BFMHRM44.USD":"NEUBERGER BERMAN GLOBAL EQUITY MEGATRENDS \"A\" (USD) ACC","LU0651946864.USD":"贝莱德新兴市场股票收益A2","LU0348816934.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (USD)","LU0650527681.SGD":"Fidelity China Consumer A-SGD","BK4554":"元宇宙及AR概念","LU1046422090.SGD":"Fidelity Pacific A-SGD","LU1051768304.USD":"贝莱德新兴市场股票收益A6","LU0251143458.SGD":"Fidelity Emerging Markets A-SGD","LU1048596156.SGD":"Blackrock Asian Growth Leaders A2 SGD-H","LU0880133367.SGD":"UBS (LUX) EQUITY FUND CHINA OPPORTUNITY USD \"P\" (SGD) ACC","LU2242644610.SGD":"Fidelity China Innovation A-ACC-SGD","LU0821914370.USD":"贝莱德亚洲成长领袖A2","LU0048580855.USD":"富达大中华区A","BK4531":"中概回港概念","LU0501845795.SGD":"瑞银大中华区股票基金P Acc SGD","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","LU0052756011.USD":"TEMPLETON GLOBAL BALANCED \"A\" (USD) INC","LU2226246903.HKD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT4\" (HKD) ACC","BK4502":"阿里概念","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4587":"ChatGPT概念","LU1267930227.SGD":"TEMPLETON GLOBAL BALANCED \"AS\" (SGD) ACC A","LU0072913022.USD":"UBS (LUX) EQUITY FUND -  GREATER CHINA \"P\" (USD) ACC","BK4524":"宅经济概念","LU1823568750.SGD":"Fidelity Global Technology A-ACC SGD","BK4535":"淡马锡持仓","BK4527":"明星科技股","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","BK4538":"云计算","BK4526":"热门中概股","BK4588":"碎股","LU0067412154.USD":"UBS (LUX) EQUITY FUND -  CHINA OPPORTUNITY \"P\" (USD) ACC","LU1105468828.SGD":"Allianz Total Return Asian Equity AM DIS H2-SGD","LU0310800965.SGD":"FTIF - Templeton Global Balanced A Acc SGD","BK4579":"人工智能","09988":"阿里巴巴-W","BK4122":"互联网与直销零售","LU0348814723.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"A\" (USD) INC  NC","LU0370786039.SGD":"Fidelity Greater China A-SGD","LU0594300419.USD":"富达中国消费基金A"},"translate_title":"阿里巴巴-SW：多头情绪回归初期？","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BABA":0.9,"09988":0.6},"content_text":"Alibaba - like many other Chinese stocks - saw its stock price jump, but the reason cannot really be found in the quarterly results.The reason is rather a sentiment shift, and Alibaba is a perfect example of a stock that was driven down by sentiment extremes and might now reverse.Alibaba is still deeply undervalued, and in my opinion, one of the best long-term investments.However, in the next few months, a correction is not unlikely.Basic Argument: Alibaba Is Deeply UndervaluedWhen looking at the last few articles about Alibaba, not every article was the same and (hopefully) every new article also contained some new and valuable information. However, the basic argument in the last two to three years was always the same. In the conclusion of my last article, I wrote, for example:In my opinion, Alibaba remains one of the best investments in this market. The stock is deeply undervalued and even when assuming that Alibaba will continue to struggle and not be able to grow, the stock is still undervalued at this point.And this was the core argument in every article – that Alibaba is deeply undervalued and a great long-term investment as we are on the one side looking at a great business with a wide economic moat and growth potential in the years to come and on the other hand a stock price reflecting an extremely bearish sentiment.And I can now proudly state, that 9 of the 12 bullish articles I wrote about Alibaba in the last 3.5 years were actually correct and investing in Alibaba at that point would now result in a gain. Of course, my first bullish articles were simply too early, and I did not see this major bear market coming. But I am still extremely confident that over the next few years all these bullish calls will work out and investing in Alibaba will generate immense profits and clearly outperform the S&P 500.Stimulus and SentimentOf course, we can argue that the stock market is forward-looking and is anticipating future results already today. And that certainly is true – stocks are increasing when investors assume higher growth rates in the coming quarters, and I am also expecting Alibaba to improve its fundamental business in the quarters and years to come. This is the reason I have already bought Alibaba several quarters ago, as I see the intrinsic value for Alibaba much higher than the current stock price (or the stock price in the last few quarters).But we must ask the following question: If investors are now discounting higher revenue, higher free cash flow, higher growth rates – was it not possible to foresee this already in August 2024 or in July 2024? What happened in September for investors to be suddenly much more optimistic about Alibaba? Of course, we all know the answer – the announcement of stimulus by the Chinese authorities was probably the reason for the stock market increase and changing sentiment. And in this case, the explanation might be right, and the cause-and-effect relationship seems obvious.Although the announcement of stimulus actually drove the stock market higher, we should also consider the following: This was not the first attempt by the Chinese authorities to stabilize its economy and the stock market by using stimulus. But in 2023, it did not really work, and most stocks continued to decline. This time it seems to work better, but we need a few more weeks (or maybe months) to know for sure. But in my opinion, it seems likely that the CSI 300 found its bottom around 3,000 points.So why did it work this time? The only satisfying answer we can give is that sentiment is changing, and the announcements and actions of the Chinese authorities contributed to a sentiment that is slowly getting more bullish. But the stimulus in explanation by itself is not enough, as such a simple explanation will never be able to explain a complex system like financial markets.Perfect Example: AlibabaAnd the perfect example to explain this in more detail is Alibaba. The stock price of Alibaba was extremely driven by sentiment in the past two years. Of course, Alibaba was not growing at such a high pace in the last two years as in the years before, but the stock price declined extremely steep and did not match the fundamentals anymore – resulting in extremely low, single-digit valuation multiples. And the stock was really struggling to move higher for a long term. Tencent, for example, declined in a similar way, but it started to recover earlier and the sentiment surrounding Tencent was probably more bullish than the sentiment surrounding Alibaba. JD is another example of a stock trading for absurdly low valuation multiples. And that is, in my opinion, the reason why Alibaba and JD are shooting up in the last few weeks, while Tencent is also increasing at a high pace but lagging a bit.Alibaba was so extremely undervalued and sentiment drove the stock down to extremely unrealistic prices, but now, with sentiment changing, the stock is moving in the opposite direction very quickly. The same is true for JD.In the following chart I am demonstrating very simplistic how this works by looking at three potential examples (in reality, thousands of scenarios are possible). Alibaba and JD could be the red line. Over the long term (several decades) the stock price will follow its fundamental performance (which would be the green line), but over shorter timeframes the stock price is exaggerating wildly in both directions.Author's workAnd in some cases, these exaggerations are more extreme (red line), in other cases they are less extreme (orange line). Almost no chart will look like the green line, although it is possible (in theory), but some assets will follow their intrinsic value closely. This might be the case when sentiment plays almost no role (for whatever reason) and when it is simple to calculate an intrinsic value for an asset.Bonds with fixed payments are an example of an asset where the calculation of an intrinsic value is “easier” and there are probably not so much completely different opinions what the intrinsic value for the bond should be. Interestingly, gold is also moving with fewer fluctuations, although it is almost impossible (in my opinion) to determine an intrinsic value for gold.Tencent Investor PresentationBut for stocks, the chart looks almost never like the green line and Tencent has a nice chart in its investor presentations to demonstrate this. Revenue and adjusted EBITDA (despite fluctuating a little more) are both growing stable, but the stock price is fluctuating wildly. But over the long run – last 20 years in this case – revenue growth and more or less matching stock price growth.What now?I started writing the article already more than a week ago and at this point the stock was still shooting up. In the meantime, the news stories have already changed: Now the news stories are all about the second-worst session since March 2020 (which is not a long timeframe to be honest). The funniest article I read was by a German news outlet explaining why Chinese stocks could be in a bubble now.What will happen now? I don’t have a crystal ball, so I can’t give you an answer, but we can look at some scenarios that might be realistic. And the most realistic scenario for the next few weeks (and maybe even the next few months) is a correction of this past up wave, and $120 is a strong resistance level for Alibaba.But over the next few years, higher stock prices for Alibaba (as well as Tencent, JD and Baidu) are very likely and the reason I am long term bullish is not politics, news stories, decisions about stimulus or anything similar – it is the extreme mismatch between the fundamental business and the stock price. Especially in the case of Alibaba, we see this mismatch (as I have argued in several articles in the past).Intrinsic Value CalculationThe mismatch between fundamentals and the stock price is still visible when looking at simple valuation metrics. While the price-earnings ratio is actually at 28 already (but mostly due to the depressed earnings per share), the price-free-cash-flow (the most important metric) is still in the low double digits (about 11.5 at the time of writing).Data by YChartsWe can also look at the price-sales ratio, which is much more stable and has less short-term fluctuations. And although the P/S ratio for Alibaba is a little higher than in previous quarters, it is still no comparison to previous years.Data by YChartsAnd although we should not expect the rally to continue in the coming weeks in a similar way as in the last few weeks, we can remain long-term bullish about the stock (and company). And when talking about the next few years (or maybe decades) we should not look at sentiment, which is driving the short-term performance. Now we should look again at the fundamental performance of the business and determine an intrinsic value by using a discount cash flow calculation.Despite the rally in the last few weeks, Alibaba is still trading below its intrinsic value (at least in my opinion). And right now, it still seems a little difficult to imagine Alibaba growing at a much higher pace again. And it might take a few quarters before Alibaba is growing at a higher pace again. But stock market participants are trying to anticipate the future and are already trying to take into account what might happen. And therefore, the stock market is a leading indicator, and the stock price is usually anticipating the fundamental performance of the economy (or a single business).In my last article, I calculated an intrinsic value of $146 for Alibaba using very cautious assumptions, and we can still use this as a low-end estimate for an intrinsic value.A Short History LessonIt is easy to call the performance of the last few weeks extraordinary or absurd, or claim that this is speculation and irrational exuberance (or a bubble). That is actually very funny in my opinion, when a stock is still down between 60% and 70% and just starting to increase again that people are calling the first move towards more reasonable stock prices irrational and a bubble.And when looking at similar times in the past, we can see this is normal. At the point of maximum pessimism (the bottom) stock prices are moving fast. They usually decline fast and when the turnaround is happening it is also happening fast (not in every case, but often). In such times, we also see fast and often erratic movements. This is just a typical pattern when sentiment might shift a bit, and investors are uncertain what the intrinsic value for a stock is.But a look at past performance shows us that the patterns we are seeing right now in the stock market are rather typical – and not really unreasonable. We can argue if it makes sense or if it is reasonable, but on the one hand is the stock market driven by emotions and sentiment, which are never reasonable, and on the other hand are these patterns very typical and can be found in past decades as well.Let’s look at a time with a major sentiment change in the United Sates – March 2009 (the bottom of the Great Financial Crisis). By the way, the stock market had its bottom in March 2009, not the economy. While the stock market turned already, the news about bankruptcies and delinquencies and foreclosures continued to be all over the news. We can expect a similar pattern for China. The stock market is a leading indicator for the economy and, therefore, in most cases ahead.TradingViewIn March 2009, the S&P 500 bottomed at 666 and only three months later, at the beginning of June 2009, it was already at 950 points – resulting in 43% growth in only three months.TradingViewOf course, not every bottom is the same. In 2002, the bottom process for the S&P 500 looked different, and the index increased not so quickly. In 2020, however, the crash we all probably remember best, the U.S. stock market rebounded quickly and volatility in March and April 2020 was extremely high.TradingViewWe can also look at individual stocks, and a good example of high volatility is Amazon. In November 2008, Amazon.com, Inc. (AMZN) already bottomed – four months before the overall stock market – at $1.74 (split adjusted) and only one year later, in November 2009, the stock was already trading for $7.30. This is not only resulting in about 320% gain in one year, but also showing how quickly stocks can move following a bottom with sentiment being extremely negative.ConclusionI am certainly not arguing that Alibaba in 2024 is comparable to Amazon in 2008, but in my opinion, Alibaba is providing the perfect recipe for the stock gaining in value quickly. Not only do we have a high-quality business with a wide economic moat and growing free cash flow, but a stock trading still about 60% below its previous all-time high and still at very low valuation multiples.When investing in Alibaba right now, we should not expect huge gains in the next few days or weeks, as a bigger correction is very likely. But over the long run (at least several years), I still think Alibaba is one of the best investments we can make in the current market environment and, in my opinion, the stock can easily double or triple over the next few years.","kind":"highlight","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":359507837837560,"gmtCreate":1728778370691,"gmtModify":1728778374586,"author":{"id":"4091363089250230","authorId":"4091363089250230","name":"CaseyLKC","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":7,"crmLevelSwitch":1,"authorIdStr":"4091363089250230","idStr":"4091363089250230"},"htmlText":"Great","listText":"Great","text":"Great","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/359507837837560","repostId":2474048918,"repostType":2,"repost":{"id":"2474048918","kind":"highlight","pubTimestamp":1728777713,"share":"https://ttm.financial/m/news/2474048918?lang=&edition=fundamental","pubTime":"2024-10-13 08:01","market":"sg","language":"en","title":"Alibaba: The Early Stage Of Returning Bullish Sentiment?","url":"https://stock-news.laohu8.com/highlight/detail?id=2474048918","media":"seekingalpha","summary":"Alibaba - like many other Chinese stocks - saw its stock price jump, but the reason cannot really be found in the quarterly results.The reason is rather a sentiment shift, and Alibaba is a perfect exa","content":"<html><head></head><body><ul style=\"\"><li><p>Alibaba - like many other Chinese stocks - saw its stock price jump, but the reason cannot really be found in the quarterly results.</p></li><li><p>The reason is rather a sentiment shift, and Alibaba is a perfect example of a stock that was driven down by sentiment extremes and might now reverse.</p></li><li><p>Alibaba is still deeply undervalued, and in my opinion, one of the best long-term investments.</p></li><li><p>However, in the next few months, a correction is not unlikely.</p></li></ul><h2 id=\"id_3181527867\">Basic Argument: Alibaba Is Deeply Undervalued</h2><p>When looking at the last few articles about Alibaba, not every article was the same and (hopefully) every new article also contained some new and valuable information. However, the basic argument in the last two to three years was always the same. In the conclusion of my last article, I wrote, for example:</p><blockquote><p>In my opinion, Alibaba remains one of the best investments in this market. The stock is deeply undervalued and even when assuming that Alibaba will continue to struggle and not be able to grow, the stock is still undervalued at this point.</p></blockquote><p>And this was the core argument in every article – that Alibaba is deeply undervalued and a great long-term investment as we are on the one side looking at a great business with a wide economic moat and growth potential in the years to come and on the other hand a stock price reflecting an extremely bearish sentiment.</p><p>And I can now proudly state, that 9 of the 12 bullish articles I wrote about Alibaba in the last 3.5 years were actually correct and investing in Alibaba at that point would now result in a gain. Of course, my first bullish articles were simply too early, and I did not see this major bear market coming. But I am still extremely confident that over the next few years all these bullish calls will work out and investing in Alibaba will generate immense profits and clearly outperform the S&amp;P 500.</p><h2 id=\"id_489586610\">Stimulus and Sentiment</h2><p>Of course, we can argue that the stock market is forward-looking and is anticipating future results already today. And that certainly is true – stocks are increasing when investors assume higher growth rates in the coming quarters, and I am also expecting Alibaba to improve its fundamental business in the quarters and years to come. This is the reason I have already bought Alibaba several quarters ago, as I see the intrinsic value for Alibaba much higher than the current stock price (or the stock price in the last few quarters).</p><p>But we must ask the following question: If investors are now discounting higher revenue, higher free cash flow, higher growth rates – was it not possible to foresee this already in August 2024 or in July 2024? What happened in September for investors to be suddenly much more optimistic about Alibaba? Of course, we all know the answer – the announcement of stimulus by the Chinese authorities was probably the reason for the stock market increase and changing sentiment. And in this case, the explanation might be right, and the cause-and-effect relationship seems obvious.</p><p>Although the announcement of stimulus actually drove the stock market higher, we should also consider the following: This was not the first attempt by the Chinese authorities to stabilize its economy and the stock market by using stimulus. But in 2023, it did not really work, and most stocks continued to decline. This time it seems to work better, but we need a few more weeks (or maybe months) to know for sure. But in my opinion, it seems likely that the CSI 300 found its bottom around 3,000 points.</p><p>So why did it work this time? The only satisfying answer we can give is that sentiment is changing, and the announcements and actions of the Chinese authorities contributed to a sentiment that is slowly getting more bullish. But the stimulus in explanation by itself is not enough, as such a simple explanation will never be able to explain a complex system like financial markets.</p><h2 id=\"id_92705098\">Perfect Example: Alibaba</h2><p>And the perfect example to explain this in more detail is Alibaba. The stock price of Alibaba was extremely driven by sentiment in the past two years. Of course, Alibaba was not growing at such a high pace in the last two years as in the years before, but the stock price declined extremely steep and did not match the fundamentals anymore – resulting in extremely low, single-digit valuation multiples. And the stock was really struggling to move higher for a long term. Tencent, for example, declined in a similar way, but it started to recover earlier and the sentiment surrounding Tencent was probably more bullish than the sentiment surrounding Alibaba. JD is another example of a stock trading for absurdly low valuation multiples. And that is, in my opinion, the reason why Alibaba and JD are shooting up in the last few weeks, while Tencent is also increasing at a high pace but lagging a bit.</p><p>Alibaba was so extremely undervalued and sentiment drove the stock down to extremely unrealistic prices, but now, with sentiment changing, the stock is moving in the opposite direction very quickly. The same is true for JD.</p><p>In the following chart I am demonstrating very simplistic how this works by looking at three potential examples (in reality, thousands of scenarios are possible). Alibaba and JD could be the red line. Over the long term (several decades) the stock price will follow its fundamental performance (which would be the green line), but over shorter timeframes the stock price is exaggerating wildly in both directions.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/f6b577adc0bd677c476b160ff44d10ca\" title=\"\" tg-width=\"640\" tg-height=\"332\"/></p><p>Author&#39;s work</p><p>And in some cases, these exaggerations are more extreme (red line), in other cases they are less extreme (orange line). Almost no chart will look like the green line, although it is possible (in theory), but some assets will follow their intrinsic value closely. This might be the case when sentiment plays almost no role (for whatever reason) and when it is simple to calculate an intrinsic value for an asset.</p><p>Bonds with fixed payments are an example of an asset where the calculation of an intrinsic value is “easier” and there are probably not so much completely different opinions what the intrinsic value for the bond should be. Interestingly, gold is also moving with fewer fluctuations, although it is almost impossible (in my opinion) to determine an intrinsic value for gold.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/f0f20a5f5b36f5ce31e0108e2f897a08\" title=\"\" tg-width=\"640\" tg-height=\"362\"/></p><p>Tencent Investor Presentation</p><p>But for stocks, the chart looks almost never like the green line and Tencent has a nice chart in its investor presentations to demonstrate this. Revenue and adjusted EBITDA (despite fluctuating a little more) are both growing stable, but the stock price is fluctuating wildly. But over the long run – last 20 years in this case – revenue growth and more or less matching stock price growth.</p><h2 id=\"id_2612387077\">What now?</h2><p>I started writing the article already more than a week ago and at this point the stock was still shooting up. In the meantime, the news stories have already changed: Now the news stories are all about the second-worst session since March 2020 (which is not a long timeframe to be honest). The funniest article I read was by a German news outlet explaining why Chinese stocks could be in a bubble now.</p><p>What will happen now? I don’t have a crystal ball, so I can’t give you an answer, but we can look at some scenarios that might be realistic. And the most realistic scenario for the next few weeks (and maybe even the next few months) is a correction of this past up wave, and $120 is a strong resistance level for Alibaba.</p><p>But over the next few years, higher stock prices for Alibaba (as well as Tencent, JD and Baidu) are very likely and the reason I am long term bullish is not politics, news stories, decisions about stimulus or anything similar – it is the extreme mismatch between the fundamental business and the stock price. Especially in the case of Alibaba, we see this mismatch (as I have argued in several articles in the past).</p><h2 id=\"id_2290230828\">Intrinsic Value Calculation</h2><p>The mismatch between fundamentals and the stock price is still visible when looking at simple valuation metrics. While the price-earnings ratio is actually at 28 already (but mostly due to the depressed earnings per share), the price-free-cash-flow (the most important metric) is still in the low double digits (about 11.5 at the time of writing).</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/69baa4035f9372cc23a05d7bb18a5b5f\" title=\"\" tg-width=\"635\" tg-height=\"439\"/></p><p>Data by YCharts</p><p></p><p>We can also look at the price-sales ratio, which is much more stable and has less short-term fluctuations. And although the P/S ratio for Alibaba is a little higher than in previous quarters, it is still no comparison to previous years.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/b6a511910ef4068404758a6dd6b9ecb8\" title=\"\" tg-width=\"635\" tg-height=\"424\"/></p><p>Data by YCharts</p><p></p><p>And although we should not expect the rally to continue in the coming weeks in a similar way as in the last few weeks, we can remain long-term bullish about the stock (and company). And when talking about the next few years (or maybe decades) we should not look at sentiment, which is driving the short-term performance. Now we should look again at the fundamental performance of the business and determine an intrinsic value by using a discount cash flow calculation.</p><p>Despite the rally in the last few weeks, Alibaba is still trading below its intrinsic value (at least in my opinion). And right now, it still seems a little difficult to imagine Alibaba growing at a much higher pace again. And it might take a few quarters before Alibaba is growing at a higher pace again. But stock market participants are trying to anticipate the future and are already trying to take into account what might happen. And therefore, the stock market is a leading indicator, and the stock price is usually anticipating the fundamental performance of the economy (or a single business).</p><p>In my last article, I calculated an intrinsic value of $146 for Alibaba using very cautious assumptions, and we can still use this as a low-end estimate for an intrinsic value.</p><h2 id=\"id_305809410\">A Short History Lesson</h2><p>It is easy to call the performance of the last few weeks extraordinary or absurd, or claim that this is speculation and irrational exuberance (or a bubble). That is actually very funny in my opinion, when a stock is still down between 60% and 70% and just starting to increase again that people are calling the first move towards more reasonable stock prices irrational and a bubble.</p><p>And when looking at similar times in the past, we can see this is normal. At the point of maximum pessimism (the bottom) stock prices are moving fast. They usually decline fast and when the turnaround is happening it is also happening fast (not in every case, but often). In such times, we also see fast and often erratic movements. This is just a typical pattern when sentiment might shift a bit, and investors are uncertain what the intrinsic value for a stock is.</p><p>But a look at past performance shows us that the patterns we are seeing right now in the stock market are rather typical – and not really unreasonable. We can argue if it makes sense or if it is reasonable, but on the one hand is the stock market driven by emotions and sentiment, which are never reasonable, and on the other hand are these patterns very typical and can be found in past decades as well.</p><p>Let’s look at a time with a major sentiment change in the United Sates – March 2009 (the bottom of the Great Financial Crisis). By the way, the stock market had its bottom in March 2009, not the economy. While the stock market turned already, the news about bankruptcies and delinquencies and foreclosures continued to be all over the news. We can expect a similar pattern for China. The stock market is a leading indicator for the economy and, therefore, in most cases ahead.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/1cafa72b121bc2e7479ad997e60a963f\" title=\"\" tg-width=\"640\" tg-height=\"393\"/></p><p>TradingView</p><p>In March 2009, the S&amp;P 500 bottomed at 666 and only three months later, at the beginning of June 2009, it was already at 950 points – resulting in 43% growth in only three months.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/45b69c04db53cddb1f2884f1204e3d77\" title=\"\" tg-width=\"640\" tg-height=\"395\"/></p><p>TradingView</p><p></p><p>Of course, not every bottom is the same. In 2002, the bottom process for the S&amp;P 500 looked different, and the index increased not so quickly. In 2020, however, the crash we all probably remember best, the U.S. stock market rebounded quickly and volatility in March and April 2020 was extremely high.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/3cfae9c1949f2cd35f3568b8a6b3ac90\" title=\"\" tg-width=\"640\" tg-height=\"393\"/></p><p>TradingView</p><p>We can also look at individual stocks, and a good example of high volatility is Amazon. In November 2008, Amazon.com, Inc. (AMZN) already bottomed – four months before the overall stock market – at $1.74 (split adjusted) and only one year later, in November 2009, the stock was already trading for $7.30. This is not only resulting in about 320% gain in one year, but also showing how quickly stocks can move following a bottom with sentiment being extremely negative.</p><h2 id=\"id_3136661567\">Conclusion</h2><p>I am certainly not arguing that Alibaba in 2024 is comparable to Amazon in 2008, but in my opinion, Alibaba is providing the perfect recipe for the stock gaining in value quickly. Not only do we have a high-quality business with a wide economic moat and growing free cash flow, but a stock trading still about 60% below its previous all-time high and still at very low valuation multiples.</p><p>When investing in Alibaba right now, we should not expect huge gains in the next few days or weeks, as a bigger correction is very likely. But over the long run (at least several years), I still think Alibaba is one of the best investments we can make in the current market environment and, in my opinion, the stock can easily double or triple over the next few years.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: The Early Stage Of Returning Bullish Sentiment?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: The Early Stage Of Returning Bullish Sentiment?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-13 08:01 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4726250-alibaba-the-early-stage-of-returning-bullish-sentiment><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Alibaba - like many other Chinese stocks - saw its stock price jump, but the reason cannot really be found in the quarterly results.The reason is rather a sentiment shift, and Alibaba is a perfect ...</p>\n\n<a href=\"https://seekingalpha.com/article/4726250-alibaba-the-early-stage-of-returning-bullish-sentiment\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0797268264.HKD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (HKD) ACC","BABA":"阿里巴巴","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","BK4504":"桥水持仓","LU1688375341.USD":"贝莱德中国灵活股票基金","BK4548":"巴美列捷福持仓","LU0918141887.USD":"安联亚洲实际收益股票基金","IE00BFMHRM44.USD":"NEUBERGER BERMAN GLOBAL EQUITY MEGATRENDS \"A\" (USD) ACC","LU0651946864.USD":"贝莱德新兴市场股票收益A2","LU0348816934.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (USD)","LU0650527681.SGD":"Fidelity China Consumer A-SGD","BK4554":"元宇宙及AR概念","LU1046422090.SGD":"Fidelity Pacific A-SGD","LU1051768304.USD":"贝莱德新兴市场股票收益A6","LU0251143458.SGD":"Fidelity Emerging Markets A-SGD","LU1048596156.SGD":"Blackrock Asian Growth Leaders A2 SGD-H","LU0880133367.SGD":"UBS (LUX) EQUITY FUND CHINA OPPORTUNITY USD \"P\" (SGD) ACC","LU2242644610.SGD":"Fidelity China Innovation A-ACC-SGD","LU0821914370.USD":"贝莱德亚洲成长领袖A2","LU0048580855.USD":"富达大中华区A","BK4531":"中概回港概念","LU0501845795.SGD":"瑞银大中华区股票基金P Acc SGD","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","LU0052756011.USD":"TEMPLETON GLOBAL BALANCED \"A\" (USD) INC","LU2226246903.HKD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT4\" (HKD) ACC","BK4502":"阿里概念","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4587":"ChatGPT概念","LU1267930227.SGD":"TEMPLETON GLOBAL BALANCED \"AS\" (SGD) ACC A","LU0072913022.USD":"UBS (LUX) EQUITY FUND -  GREATER CHINA \"P\" (USD) ACC","BK4524":"宅经济概念","LU1823568750.SGD":"Fidelity Global Technology A-ACC SGD","BK4535":"淡马锡持仓","BK4527":"明星科技股","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","BK4538":"云计算","BK4526":"热门中概股","BK4588":"碎股","LU0067412154.USD":"UBS (LUX) EQUITY FUND -  CHINA OPPORTUNITY \"P\" (USD) ACC","LU1105468828.SGD":"Allianz Total Return Asian Equity AM DIS H2-SGD","LU0310800965.SGD":"FTIF - Templeton Global Balanced A Acc SGD","BK4579":"人工智能","09988":"阿里巴巴-W","BK4122":"互联网与直销零售","LU0348814723.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"A\" (USD) INC  NC","LU0370786039.SGD":"Fidelity Greater China A-SGD","LU0594300419.USD":"富达中国消费基金A"},"source_url":"https://seekingalpha.com/article/4726250-alibaba-the-early-stage-of-returning-bullish-sentiment","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2474048918","content_text":"Alibaba - like many other Chinese stocks - saw its stock price jump, but the reason cannot really be found in the quarterly results.The reason is rather a sentiment shift, and Alibaba is a perfect example of a stock that was driven down by sentiment extremes and might now reverse.Alibaba is still deeply undervalued, and in my opinion, one of the best long-term investments.However, in the next few months, a correction is not unlikely.Basic Argument: Alibaba Is Deeply UndervaluedWhen looking at the last few articles about Alibaba, not every article was the same and (hopefully) every new article also contained some new and valuable information. However, the basic argument in the last two to three years was always the same. In the conclusion of my last article, I wrote, for example:In my opinion, Alibaba remains one of the best investments in this market. The stock is deeply undervalued and even when assuming that Alibaba will continue to struggle and not be able to grow, the stock is still undervalued at this point.And this was the core argument in every article – that Alibaba is deeply undervalued and a great long-term investment as we are on the one side looking at a great business with a wide economic moat and growth potential in the years to come and on the other hand a stock price reflecting an extremely bearish sentiment.And I can now proudly state, that 9 of the 12 bullish articles I wrote about Alibaba in the last 3.5 years were actually correct and investing in Alibaba at that point would now result in a gain. Of course, my first bullish articles were simply too early, and I did not see this major bear market coming. But I am still extremely confident that over the next few years all these bullish calls will work out and investing in Alibaba will generate immense profits and clearly outperform the S&P 500.Stimulus and SentimentOf course, we can argue that the stock market is forward-looking and is anticipating future results already today. And that certainly is true – stocks are increasing when investors assume higher growth rates in the coming quarters, and I am also expecting Alibaba to improve its fundamental business in the quarters and years to come. This is the reason I have already bought Alibaba several quarters ago, as I see the intrinsic value for Alibaba much higher than the current stock price (or the stock price in the last few quarters).But we must ask the following question: If investors are now discounting higher revenue, higher free cash flow, higher growth rates – was it not possible to foresee this already in August 2024 or in July 2024? What happened in September for investors to be suddenly much more optimistic about Alibaba? Of course, we all know the answer – the announcement of stimulus by the Chinese authorities was probably the reason for the stock market increase and changing sentiment. And in this case, the explanation might be right, and the cause-and-effect relationship seems obvious.Although the announcement of stimulus actually drove the stock market higher, we should also consider the following: This was not the first attempt by the Chinese authorities to stabilize its economy and the stock market by using stimulus. But in 2023, it did not really work, and most stocks continued to decline. This time it seems to work better, but we need a few more weeks (or maybe months) to know for sure. But in my opinion, it seems likely that the CSI 300 found its bottom around 3,000 points.So why did it work this time? The only satisfying answer we can give is that sentiment is changing, and the announcements and actions of the Chinese authorities contributed to a sentiment that is slowly getting more bullish. But the stimulus in explanation by itself is not enough, as such a simple explanation will never be able to explain a complex system like financial markets.Perfect Example: AlibabaAnd the perfect example to explain this in more detail is Alibaba. The stock price of Alibaba was extremely driven by sentiment in the past two years. Of course, Alibaba was not growing at such a high pace in the last two years as in the years before, but the stock price declined extremely steep and did not match the fundamentals anymore – resulting in extremely low, single-digit valuation multiples. And the stock was really struggling to move higher for a long term. Tencent, for example, declined in a similar way, but it started to recover earlier and the sentiment surrounding Tencent was probably more bullish than the sentiment surrounding Alibaba. JD is another example of a stock trading for absurdly low valuation multiples. And that is, in my opinion, the reason why Alibaba and JD are shooting up in the last few weeks, while Tencent is also increasing at a high pace but lagging a bit.Alibaba was so extremely undervalued and sentiment drove the stock down to extremely unrealistic prices, but now, with sentiment changing, the stock is moving in the opposite direction very quickly. The same is true for JD.In the following chart I am demonstrating very simplistic how this works by looking at three potential examples (in reality, thousands of scenarios are possible). Alibaba and JD could be the red line. Over the long term (several decades) the stock price will follow its fundamental performance (which would be the green line), but over shorter timeframes the stock price is exaggerating wildly in both directions.Author's workAnd in some cases, these exaggerations are more extreme (red line), in other cases they are less extreme (orange line). Almost no chart will look like the green line, although it is possible (in theory), but some assets will follow their intrinsic value closely. This might be the case when sentiment plays almost no role (for whatever reason) and when it is simple to calculate an intrinsic value for an asset.Bonds with fixed payments are an example of an asset where the calculation of an intrinsic value is “easier” and there are probably not so much completely different opinions what the intrinsic value for the bond should be. Interestingly, gold is also moving with fewer fluctuations, although it is almost impossible (in my opinion) to determine an intrinsic value for gold.Tencent Investor PresentationBut for stocks, the chart looks almost never like the green line and Tencent has a nice chart in its investor presentations to demonstrate this. Revenue and adjusted EBITDA (despite fluctuating a little more) are both growing stable, but the stock price is fluctuating wildly. But over the long run – last 20 years in this case – revenue growth and more or less matching stock price growth.What now?I started writing the article already more than a week ago and at this point the stock was still shooting up. In the meantime, the news stories have already changed: Now the news stories are all about the second-worst session since March 2020 (which is not a long timeframe to be honest). The funniest article I read was by a German news outlet explaining why Chinese stocks could be in a bubble now.What will happen now? I don’t have a crystal ball, so I can’t give you an answer, but we can look at some scenarios that might be realistic. And the most realistic scenario for the next few weeks (and maybe even the next few months) is a correction of this past up wave, and $120 is a strong resistance level for Alibaba.But over the next few years, higher stock prices for Alibaba (as well as Tencent, JD and Baidu) are very likely and the reason I am long term bullish is not politics, news stories, decisions about stimulus or anything similar – it is the extreme mismatch between the fundamental business and the stock price. Especially in the case of Alibaba, we see this mismatch (as I have argued in several articles in the past).Intrinsic Value CalculationThe mismatch between fundamentals and the stock price is still visible when looking at simple valuation metrics. While the price-earnings ratio is actually at 28 already (but mostly due to the depressed earnings per share), the price-free-cash-flow (the most important metric) is still in the low double digits (about 11.5 at the time of writing).Data by YChartsWe can also look at the price-sales ratio, which is much more stable and has less short-term fluctuations. And although the P/S ratio for Alibaba is a little higher than in previous quarters, it is still no comparison to previous years.Data by YChartsAnd although we should not expect the rally to continue in the coming weeks in a similar way as in the last few weeks, we can remain long-term bullish about the stock (and company). And when talking about the next few years (or maybe decades) we should not look at sentiment, which is driving the short-term performance. Now we should look again at the fundamental performance of the business and determine an intrinsic value by using a discount cash flow calculation.Despite the rally in the last few weeks, Alibaba is still trading below its intrinsic value (at least in my opinion). And right now, it still seems a little difficult to imagine Alibaba growing at a much higher pace again. And it might take a few quarters before Alibaba is growing at a higher pace again. But stock market participants are trying to anticipate the future and are already trying to take into account what might happen. And therefore, the stock market is a leading indicator, and the stock price is usually anticipating the fundamental performance of the economy (or a single business).In my last article, I calculated an intrinsic value of $146 for Alibaba using very cautious assumptions, and we can still use this as a low-end estimate for an intrinsic value.A Short History LessonIt is easy to call the performance of the last few weeks extraordinary or absurd, or claim that this is speculation and irrational exuberance (or a bubble). That is actually very funny in my opinion, when a stock is still down between 60% and 70% and just starting to increase again that people are calling the first move towards more reasonable stock prices irrational and a bubble.And when looking at similar times in the past, we can see this is normal. At the point of maximum pessimism (the bottom) stock prices are moving fast. They usually decline fast and when the turnaround is happening it is also happening fast (not in every case, but often). In such times, we also see fast and often erratic movements. This is just a typical pattern when sentiment might shift a bit, and investors are uncertain what the intrinsic value for a stock is.But a look at past performance shows us that the patterns we are seeing right now in the stock market are rather typical – and not really unreasonable. We can argue if it makes sense or if it is reasonable, but on the one hand is the stock market driven by emotions and sentiment, which are never reasonable, and on the other hand are these patterns very typical and can be found in past decades as well.Let’s look at a time with a major sentiment change in the United Sates – March 2009 (the bottom of the Great Financial Crisis). By the way, the stock market had its bottom in March 2009, not the economy. While the stock market turned already, the news about bankruptcies and delinquencies and foreclosures continued to be all over the news. We can expect a similar pattern for China. The stock market is a leading indicator for the economy and, therefore, in most cases ahead.TradingViewIn March 2009, the S&P 500 bottomed at 666 and only three months later, at the beginning of June 2009, it was already at 950 points – resulting in 43% growth in only three months.TradingViewOf course, not every bottom is the same. In 2002, the bottom process for the S&P 500 looked different, and the index increased not so quickly. In 2020, however, the crash we all probably remember best, the U.S. stock market rebounded quickly and volatility in March and April 2020 was extremely high.TradingViewWe can also look at individual stocks, and a good example of high volatility is Amazon. In November 2008, Amazon.com, Inc. (AMZN) already bottomed – four months before the overall stock market – at $1.74 (split adjusted) and only one year later, in November 2009, the stock was already trading for $7.30. This is not only resulting in about 320% gain in one year, but also showing how quickly stocks can move following a bottom with sentiment being extremely negative.ConclusionI am certainly not arguing that Alibaba in 2024 is comparable to Amazon in 2008, but in my opinion, Alibaba is providing the perfect recipe for the stock gaining in value quickly. Not only do we have a high-quality business with a wide economic moat and growing free cash flow, but a stock trading still about 60% below its previous all-time high and still at very low valuation multiples.When investing in Alibaba right now, we should not expect huge gains in the next few days or weeks, as a bigger correction is very likely. But over the long run (at least several years), I still think Alibaba is one of the best investments we can make in the current market environment and, in my opinion, the stock can easily double or triple over the next few years.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":11,"commentSize":1,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2474048918"}