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Ironman2002
01-31

Alibaba forgot the password "open saseme" and got trapped!

Alibaba: Cannot Be Undervalued Forever

Alibaba's diverse business lines, including e-commerce, cloud, and digital media, form a strong ecosystem that drives down costs and attracts customers.The company's robust balance sheet, with substan

Alibaba: Cannot Be Undervalued Forever

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{"i18n":{"language":"en_US"},"data":{"magic":2,"id":268848476143704,"tweetId":"268848476143704","gmtCreate":1706671517149,"gmtModify":1706671521080,"author":{"id":4094301913132990,"idStr":"4094301913132990","authorId":4094301913132990,"authorIdStr":"4094301913132990","name":"Ironman2002","avatar":"https://static.tigerbbs.com/784449fc945cf9d5c7b81316e20a221c","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":5,"crmLevelSwitch":1,"individualDisplayBadges":[],"fanSize":11,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"html":"<html><head></head><body>Alibaba forgot the password \"open saseme\" and got trapped!</body></html>","htmlText":"<html><head></head><body>Alibaba forgot the password \"open saseme\" and got trapped!</body></html>","text":"Alibaba forgot the password \"open saseme\" and got trapped!","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/268848476143704","repostId":2407805923,"repostType":2,"repost":{"id":"2407805923","pubTimestamp":1706662883,"share":"https://www.laohu8.com/m/news/2407805923?lang=&edition=full","pubTime":"2024-01-31 09:01","market":"us","language":"en","title":"Alibaba: Cannot Be Undervalued Forever","url":"https://stock-news.laohu8.com/highlight/detail?id=2407805923","media":"seekingalpha","summary":"Alibaba's diverse business lines, including e-commerce, cloud, and digital media, form a strong ecosystem that drives down costs and attracts customers.The company's robust balance sheet, with substan","content":"<html><head></head><body><ul style=\"\"><li>Alibaba&#39;s diverse business lines, including e-commerce, cloud, and digital media, form a strong ecosystem that drives down costs and attracts customers.</li><li>The company&#39;s robust balance sheet, with substantial investments in research and development, ensures long-term growth and strategic resilience.</li><li>My target price for the stock is $178.</li></ul><img src=\"https://static.tigerbbs.com/462cd3697f83bcec3578c700effe99fc\" tg-width=\"750\" tg-height=\"500\"/><h2 id=\"id_3297037323\">Introduction</h2>Despite multiple-fold business expansion over the last ten years, Alibaba&#39;s (NYSE:BABA) stock currently trades below levels when the company went public on the U.S. stock market. While acknowledging political risks and geopolitical tensions, Alibaba remains a formidable player in the world&#39;s second-largest economy, showcasing exceptional scale and efficiency across its diverse business lines. The company&#39;s robust balance sheet empowers substantial investments in research and development, ensuring long-term growth and strategic resilience. With a target price of $178, implying significant upside potential and considering Alibaba&#39;s stellar profitability, the stock emerges as a compelling &#39;Strong Buy&#39; opportunity, offering substantial potential benefits for investors.<h2 id=\"id_1321167523\">Fundamental analysis</h2>Alibaba is a Chinese, one of the largest technological companies in the world, operating in several segments exposed to various industries, including e-commerce, cloud, smart logistics, and digital media. It is important to mention that all of Alibaba&#39;s businesses form an ecosystem, which gives the company advantages in driving down customer acquisition and retention costs.<img src=\"https://static.tigerbbs.com/51875421553bbad4d6f20349dfd8f2b3\" tg-width=\"640\" tg-height=\"334\"/>BABA&#39;s Q3 FY2023 reportAs can be seen above, in Q3, e-commerce represented more than half of Alibaba&#39;s total sales, and I will start my analysis with it. Apart from the e-commerce itself, I consider Local Services Group and Smart Logistics to be closely tied to this business as well. According to Statista, the number of active consumers across Alibaba&#39;s online shopping properties has doubled between 2017 and 2022, which indicates a strong 15% CAGR. Having more than 900 million annual active customers makes Alibaba a very attractive platform for merchants, and there are more than 8 million sellers there. Given its immense scale and international reach, Alibaba&#39;s e-commerce business is firmly entrenched in the industry, making replication nearly impossible. This is important and positive for investors because the Chinese e-commerce market is expected to grow at an 11.3% CAGR by 2029, a huge tailwind for Alibaba&#39;s biggest business.<img src=\"https://static.tigerbbs.com/d567d027e2dbe48532b03cd5618d2d04\" tg-width=\"640\" tg-height=\"327\"/>Mordor IntelligenceAlibaba stands out as a significant player in the cloud business, securing a 4% global market share and ranking fourth, trailing behind American technology giants such as Amazon (AMZN), Microsoft (MSFT), and Google (GOOG). I must emphasize that Alibaba faces certain constraints in its global cloud expansion due to cybersecurity and potential espionage concerns amid the ongoing tensions between the East and West. However, these challenges also serve to safeguard Alibaba&#39;s stronghold in its local market, the world&#39;s second-largest economy. While I personally haven&#39;t used Alibaba&#39;s cloud services, I believe that the company&#39;s extensive e-commerce database, enriched with data on advertising, spending patterns, and more, provides a robust foundation for its artificial intelligence (&#34;AI&#34;) and machine learning (&#34;ML&#34;) algorithms. This, in turn, positions Alibaba to develop sophisticated AI capabilities for its cloud services. The Chinese cloud market is forecasted to deliver an impressive 18.7% CAGR during the next five years, which is another big positive trend for Alibaba. It is also important to outline that Alibaba&#39;s &#34;All others&#34; line in the P&amp;L is mostly represented by AI-leveraged services like DingTalk, Quark, and UCWeb.<img src=\"https://static.tigerbbs.com/63ccd6695e4dfa58c4bd668fdfc4694a\" tg-width=\"640\" tg-height=\"475\"/>StatistaAlthough Alibaba&#39;s Digital Media and Entertainment business currently represents a smaller segment than the company&#39;s vast scale, I see it as a crucial component that generates solid synergies that benefit the overall business. This strategic alignment, I believe, contributes to driving growth not only in the Digital Media and Entertainment sector but also positively impacts the core pillars of Alibaba&#39;s business, namely E-commerce and Cloud services. With nearly a billion annual active buyers, Alibaba holds a substantial advantage for potentially cultivating its Digital Media and Entertainment business into a noteworthy revenue stream. However, I remain cautious about the feasibility of rapid growth prospects in the next few years.<img src=\"https://static.tigerbbs.com/fb2850275ab7dc21d024a448b9dc61c9\" tg-width=\"635\" tg-height=\"467\"/>Data by YChartsWhile having robust exposure to emerging industries and a massive scale is certainly valuable, skeptics argue that it might not be sufficient, and I tend to agree. To assess the likelihood of success, I turn to the company&#39;s historical performance and financial position. Alibaba&#39;s top line has shown recent signs of stagnation, but the overall trend over the past decade has been impressive. Operating income continues to expand, and Alibaba consistently outpaces its peers in terms of profitability metrics. It&#39;s noteworthy that Alibaba allocates billions of dollars annually to innovation, as depicted in the graph above. And the company&#39;s financial position gives me huge optimism about the company&#39;s ability to continue investing in growth and innovation heavily. Alibaba had almost $80 billion in cash as of September 30, 2023, which was more than $50 billion higher than the total debt.<img src=\"https://static.tigerbbs.com/b681ac9dc2f7388da3d14149191261e4\" tg-width=\"640\" tg-height=\"445\"/>SAAs Alibaba gears up for its upcoming quarterly earnings release on February 7, market expectations indicate a modest 2% YoY growth in revenue to $36.7 billion, accompanied by a slight dip in adjusted EPS from $2.79 to $2.67. The prevailing pessimism, evident in 23 downward EPS revisions over the last 90 days, suggests a conservative outlook. While generally not favorable for investors, this pessimism may already be factored into the stock price, potentially paving the way for positive surprises. Although Alibaba has a history of seldom delivering substantial revenue beats, it has consistently shown solid positive surprises on the bottom line across multiple quarters. Consequently, my outlook for the upcoming earnings release remains optimistic. The significance of the full fiscal 2024 revenue guidance cannot be overstated. However, I am inclined to think that the consensus estimate of approximately 7% growth is overly conservative for a company of Alibaba&#39;s caliber, and I anticipate no downward revisions in this regard.<img src=\"https://static.tigerbbs.com/c95d34e3fc5d18728944220a1f2491e3\" tg-width=\"640\" tg-height=\"226\"/>SAIn summary of the fundamental analysis, I am optimistic that Alibaba possesses the necessary resources to sustain strong performance across its diverse revenue streams. The recent news of insiders purchasing BABA shares worth $200 million in the past week further reinforces confidence in the company&#39;s growth prospects.<h2 id=\"id_2548404283\">Valuation analysis</h2>To gauge the current valuation of Alibaba&#39;s stock in relation to historical levels, let&#39;s examine the stock&#39;s all-time price chart. Remarkably, BABA is currently priced lower than its initial public offering almost a decade ago. Meanwhile, Alibaba&#39;s revenue has surged over fifteenfold, and EBITDA has nearly sextupled during this period. Looking at the balance sheet over the last decade, Alibaba&#39;s total assets increased by fifteen times as well.<img src=\"https://static.tigerbbs.com/13b59687de0402ea028dfbe7ec2a64bd\" tg-width=\"640\" tg-height=\"278\"/>SAI acknowledge the influence of country and political risks on the valuation comparison between Chinese companies and their U.S. counterparts may not be entirely fair. However, when assessing Alibaba&#39;s valuation ratios against those of Amazon, I find the gap to be excessively wide, even after factoring in political risks and the typical premium associated with U.S. stocks. This further underscores the substantial undervaluation of Alibaba&#39;s stock.<img src=\"https://static.tigerbbs.com/047ad34148ad858ccf49f9eeb022ce2f\" tg-width=\"640\" tg-height=\"529\"/>SALet me perform a discounted cash flow (&#34;DCF&#34;) model for Alibaba, applying a 7.5% WACC provided by Finbox. The constant growth rate for the terminal value (&#34;TV&#34;) calculation is a very conservative 2%. The levered free cash flow (&#34;FCF&#34;) margin is 14.17% for the base year, with the expected 50 basis points improvement yearly. I incorporate revenue consensus estimates for the base year and 2024, opting for a more conservative scenario with a gradual deceleration in revenue growth thereafter. There are slightly above 2.5 billion BABA shares outstanding at the moment.<img src=\"https://static.tigerbbs.com/c20ded17f5d3e0a5e88f9e17a871f32c\" tg-width=\"640\" tg-height=\"304\"/>Calculated by the authorThe fair valuation generated by my DCF analysis points to approximately $178 per share, signifying more than double the last closing price and presenting a compelling 140% upside potential.<h2 id=\"id_2168331952\">Mitigating factors</h2>The recent three-year trajectory of BABA suggests that the stock&#39;s price exhibits minimal correlation with the underlying fundamentals. Various adverse factors unrelated to the company&#39;s operations significantly impacted the stock price. Inherent undervaluation stems from political and geopolitical threats, with the market price deviating notably from the consensus target since September 2020. Potential investors should take note of this divergence.<img src=\"https://static.tigerbbs.com/479ff58aebd75222ad564755597261d8\" tg-width=\"640\" tg-height=\"439\"/>marketscreener.comSkepticism persists regarding the outlook for the broader Chinese economy. CNN recently labeled 2023 as a &#39;miserable year&#39; for China, expressing doubt that 2024 will bring substantial improvement. In early December 2023, Moody&#39;s put China on a credit risk downgrade warning, recognizing numerous risks for the Chinese economy as well. I believe the positive momentum in e-commerce and cloud will remain key drivers for Alibaba&#39;s revenue growth. However, potential challenges in the broader economic landscape could pose a risk to the pace of this growth, particularly for a company focused on expansion like Alibaba.<h2 id=\"id_1551961236\">Conclusion</h2>I believe that Alibaba&#39;s attractive valuation outweighs the associated risks, and the stock can&#39;t remain substantially undervalued indefinitely. While investors may have experienced share price challenges in recent years, the crucial factor for long-term investors is the company&#39;s ongoing expansion with stellar profitability. In my view, Alibaba&#39;s stock clearly merits a &#34;Strong Buy&#34; rating.</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: Cannot Be Undervalued Forever</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; 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}\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: Cannot Be Undervalued Forever\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-01-31 09:01 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4665963-alibaba-cannot-be-undervalued-forever>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nAlibaba's diverse business lines, including e-commerce, cloud, and digital media, form a strong ecosystem that drives down costs and attracts customers.The company's robust balance sheet, with ...\n\n<a href=\"https://seekingalpha.com/article/4665963-alibaba-cannot-be-undervalued-forever\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4575":"芯片概念","LU1691799644.USD":"Amundi Funds Polen Capital Global Growth A2 (C) USD","BK4566":"资本集团","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","LU0861579265.USD":"联博低波幅策略股票基金A","BK4527":"明星科技股","BK4559":"巴菲特持仓","BK4579":"人工智能","LU1880383366.USD":"东方汇理中国股票基金 A2 (C)","BK4550":"红杉资本持仓","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","LU0097036916.USD":"贝莱德美国增长A2 USD","AMZN":"亚马逊","LU1316542783.SGD":"Janus Henderson Horizon Global Technology Leaders A2 SGD","LU0348816934.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (USD)","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","IE00BLSP4452.SGD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis SGD-H Plus","BK4551":"寇图资本持仓","IE00BFSS7M15.SGD":"Janus Henderson Balanced A Acc SGD-H","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","LU0238689110.USD":"贝莱德环球动力股票基金","LU0880133367.SGD":"UBS (LUX) EQUITY FUND CHINA OPPORTUNITY USD \"P\" (SGD) ACC","IE0034235295.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"A\" (USD) ACC","LU0501845795.SGD":"瑞银大中华区股票基金P Acc SGD","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","IE00BDCRKT87.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC","LU0312595415.SGD":"Schroder ISF Global Climate Change Equity A Acc SGD","GOOG":"谷歌","LU2237443549.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA SGD-H","LU0640476718.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQ \"AU\" (USD) ACC","BK4548":"巴美列捷福持仓","LU2237443622.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc USD","BK4567":"ESG概念","BK4565":"NFT概念","LU0308772762.SGD":"Blackrock Global Allocation A2 SGD-H","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","LU0072913022.USD":"UBS (LUX) EQUITY FUND - GREATER CHINA \"P\" (USD) ACC","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","LU2237443978.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc SGD-H","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","LU0171293334.USD":"贝莱德英国基金A2","BK4554":"元宇宙及AR概念","LU1105468828.SGD":"Allianz Total Return Asian Equity AM DIS H2-SGD","BK4553":"喜马拉雅资本持仓","MSFT":"微软","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)"},"source_url":"https://seekingalpha.com/article/4665963-alibaba-cannot-be-undervalued-forever","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2407805923","content_text":"Alibaba's diverse business lines, including e-commerce, cloud, and digital media, form a strong ecosystem that drives down costs and attracts customers.The company's robust balance sheet, with substantial investments in research and development, ensures long-term growth and strategic resilience.My target price for the stock is $178.IntroductionDespite multiple-fold business expansion over the last ten years, Alibaba's (NYSE:BABA) stock currently trades below levels when the company went public on the U.S. stock market. While acknowledging political risks and geopolitical tensions, Alibaba remains a formidable player in the world's second-largest economy, showcasing exceptional scale and efficiency across its diverse business lines. The company's robust balance sheet empowers substantial investments in research and development, ensuring long-term growth and strategic resilience. With a target price of $178, implying significant upside potential and considering Alibaba's stellar profitability, the stock emerges as a compelling 'Strong Buy' opportunity, offering substantial potential benefits for investors.Fundamental analysisAlibaba is a Chinese, one of the largest technological companies in the world, operating in several segments exposed to various industries, including e-commerce, cloud, smart logistics, and digital media. It is important to mention that all of Alibaba's businesses form an ecosystem, which gives the company advantages in driving down customer acquisition and retention costs.BABA's Q3 FY2023 reportAs can be seen above, in Q3, e-commerce represented more than half of Alibaba's total sales, and I will start my analysis with it. Apart from the e-commerce itself, I consider Local Services Group and Smart Logistics to be closely tied to this business as well. According to Statista, the number of active consumers across Alibaba's online shopping properties has doubled between 2017 and 2022, which indicates a strong 15% CAGR. Having more than 900 million annual active customers makes Alibaba a very attractive platform for merchants, and there are more than 8 million sellers there. Given its immense scale and international reach, Alibaba's e-commerce business is firmly entrenched in the industry, making replication nearly impossible. This is important and positive for investors because the Chinese e-commerce market is expected to grow at an 11.3% CAGR by 2029, a huge tailwind for Alibaba's biggest business.Mordor IntelligenceAlibaba stands out as a significant player in the cloud business, securing a 4% global market share and ranking fourth, trailing behind American technology giants such as Amazon (AMZN), Microsoft (MSFT), and Google (GOOG). I must emphasize that Alibaba faces certain constraints in its global cloud expansion due to cybersecurity and potential espionage concerns amid the ongoing tensions between the East and West. However, these challenges also serve to safeguard Alibaba's stronghold in its local market, the world's second-largest economy. While I personally haven't used Alibaba's cloud services, I believe that the company's extensive e-commerce database, enriched with data on advertising, spending patterns, and more, provides a robust foundation for its artificial intelligence (\"AI\") and machine learning (\"ML\") algorithms. This, in turn, positions Alibaba to develop sophisticated AI capabilities for its cloud services. The Chinese cloud market is forecasted to deliver an impressive 18.7% CAGR during the next five years, which is another big positive trend for Alibaba. It is also important to outline that Alibaba's \"All others\" line in the P&L is mostly represented by AI-leveraged services like DingTalk, Quark, and UCWeb.StatistaAlthough Alibaba's Digital Media and Entertainment business currently represents a smaller segment than the company's vast scale, I see it as a crucial component that generates solid synergies that benefit the overall business. This strategic alignment, I believe, contributes to driving growth not only in the Digital Media and Entertainment sector but also positively impacts the core pillars of Alibaba's business, namely E-commerce and Cloud services. With nearly a billion annual active buyers, Alibaba holds a substantial advantage for potentially cultivating its Digital Media and Entertainment business into a noteworthy revenue stream. However, I remain cautious about the feasibility of rapid growth prospects in the next few years.Data by YChartsWhile having robust exposure to emerging industries and a massive scale is certainly valuable, skeptics argue that it might not be sufficient, and I tend to agree. To assess the likelihood of success, I turn to the company's historical performance and financial position. Alibaba's top line has shown recent signs of stagnation, but the overall trend over the past decade has been impressive. Operating income continues to expand, and Alibaba consistently outpaces its peers in terms of profitability metrics. It's noteworthy that Alibaba allocates billions of dollars annually to innovation, as depicted in the graph above. And the company's financial position gives me huge optimism about the company's ability to continue investing in growth and innovation heavily. Alibaba had almost $80 billion in cash as of September 30, 2023, which was more than $50 billion higher than the total debt.SAAs Alibaba gears up for its upcoming quarterly earnings release on February 7, market expectations indicate a modest 2% YoY growth in revenue to $36.7 billion, accompanied by a slight dip in adjusted EPS from $2.79 to $2.67. The prevailing pessimism, evident in 23 downward EPS revisions over the last 90 days, suggests a conservative outlook. While generally not favorable for investors, this pessimism may already be factored into the stock price, potentially paving the way for positive surprises. Although Alibaba has a history of seldom delivering substantial revenue beats, it has consistently shown solid positive surprises on the bottom line across multiple quarters. Consequently, my outlook for the upcoming earnings release remains optimistic. The significance of the full fiscal 2024 revenue guidance cannot be overstated. However, I am inclined to think that the consensus estimate of approximately 7% growth is overly conservative for a company of Alibaba's caliber, and I anticipate no downward revisions in this regard.SAIn summary of the fundamental analysis, I am optimistic that Alibaba possesses the necessary resources to sustain strong performance across its diverse revenue streams. The recent news of insiders purchasing BABA shares worth $200 million in the past week further reinforces confidence in the company's growth prospects.Valuation analysisTo gauge the current valuation of Alibaba's stock in relation to historical levels, let's examine the stock's all-time price chart. Remarkably, BABA is currently priced lower than its initial public offering almost a decade ago. Meanwhile, Alibaba's revenue has surged over fifteenfold, and EBITDA has nearly sextupled during this period. Looking at the balance sheet over the last decade, Alibaba's total assets increased by fifteen times as well.SAI acknowledge the influence of country and political risks on the valuation comparison between Chinese companies and their U.S. counterparts may not be entirely fair. However, when assessing Alibaba's valuation ratios against those of Amazon, I find the gap to be excessively wide, even after factoring in political risks and the typical premium associated with U.S. stocks. This further underscores the substantial undervaluation of Alibaba's stock.SALet me perform a discounted cash flow (\"DCF\") model for Alibaba, applying a 7.5% WACC provided by Finbox. The constant growth rate for the terminal value (\"TV\") calculation is a very conservative 2%. The levered free cash flow (\"FCF\") margin is 14.17% for the base year, with the expected 50 basis points improvement yearly. I incorporate revenue consensus estimates for the base year and 2024, opting for a more conservative scenario with a gradual deceleration in revenue growth thereafter. There are slightly above 2.5 billion BABA shares outstanding at the moment.Calculated by the authorThe fair valuation generated by my DCF analysis points to approximately $178 per share, signifying more than double the last closing price and presenting a compelling 140% upside potential.Mitigating factorsThe recent three-year trajectory of BABA suggests that the stock's price exhibits minimal correlation with the underlying fundamentals. Various adverse factors unrelated to the company's operations significantly impacted the stock price. Inherent undervaluation stems from political and geopolitical threats, with the market price deviating notably from the consensus target since September 2020. Potential investors should take note of this divergence.marketscreener.comSkepticism persists regarding the outlook for the broader Chinese economy. CNN recently labeled 2023 as a 'miserable year' for China, expressing doubt that 2024 will bring substantial improvement. In early December 2023, Moody's put China on a credit risk downgrade warning, recognizing numerous risks for the Chinese economy as well. I believe the positive momentum in e-commerce and cloud will remain key drivers for Alibaba's revenue growth. However, potential challenges in the broader economic landscape could pose a risk to the pace of this growth, particularly for a company focused on expansion like Alibaba.ConclusionI believe that Alibaba's attractive valuation outweighs the associated risks, and the stock can't remain substantially undervalued indefinitely. While investors may have experienced share price challenges in recent years, the crucial factor for long-term investors is the company's ongoing expansion with stellar profitability. In my view, Alibaba's stock clearly merits a \"Strong Buy\" rating.","news_type":1},"isVote":1,"tweetType":1,"viewCount":412,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":50,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}