Alibaba reports BMO tomorrow and is down 3% today on claims that the government regulator is concerned with fraud and oversight. Buy the dip?

jack ma alibabaIn our view SAIC claims are noise and isn’t regulator looking to clean up fraud by merchants and counterfeit products a good thing for the biggest player in the market?

Frankly this stuff pervading only helps smaller players who are trying to get an edge. The fact that they delayed the report to not disrupt the IPO tells you who really they are protecting!

  • F3Q +56% q/q 41% y/y
  • Watching margin degradation from 60% EBITDA to 50.5% FQ’15; you have to be concerned about their funding of diversification and investments
  • Mobile is 40% of GMV now 36.3% of China revenue vs 29% 2Q
  • Curious about business line extensions into cloud computing, online travel, media

Alibaba is a flagship emerging market Blue-chip play until proven otherwise and the growth pace has some time before slowing. Governance concerns in China are always easy to focus on but betting with the state often pays big dividends in EM. Make no mistake Alibaba exists because the government lets it exist. You are betting with the state.

Tagged with:
 

Leave a Reply