NYSE:BABA – Is BABA Stock a Long-Term Value Play?


NYSE: BABA – Alibaba Group Holding Limited, also known as Alibaba, is a Chinese multinational technology company that specializes in Internet, retail, and e-commerce. Although its stock price is relatively expensive, it has a very optimistic outlook. The company’s fiscal first quarter revenue was $30.7 billion.

Alibaba Group Holding Limited (NYSE: BABA)

NYSE: BABA is the ticker for Alibaba Group Holding Stock. The company is a Chinese e-commerce and Internet powerhouse. It operates four business segments: e-commerce, retail, digital media, and logistics. Its core commerce business accounts for most of its overall sales.

There is no question that Alibaba has a great track record. But the stock has not performed as expected in recent months. It has dropped nearly 50% in the past year. The yuan has devalued, affecting the company’s core business. It has also been subject to various regulatory and movement restrictions.

It has recently announced plans to overhaul its e-commerce operations and form two new digital commerce divisions. However, it has been slow to roll out these innovations. In the meantime, it is facing increasing external challenges.

NYSE: BABA’s bullish outlook

Despite the fact that Alibaba’s stock has overswung to the downside in recent weeks, analysts and investors alike are weighing it as a long-term value play. The company’s hands in numerous hot growth markets could help it weather the storm. The company has a long-term growth plan that includes investments in core growth drivers, such as e-commerce, as well as initiatives to wind down money-losing segments.

A recent management shakeup could turn around the company’s less-than-stellar results. The firm’s most recent fiscal results showed adjusted profit up 5% year over year to $1.82 a share, but revenue was down 6% to $29.1 billion. A revamped management team is looking to streamline the company’s operations, including its massive e-commerce platform.

Other noteworthy achievements include the company’s repurchase of an additional $18 billion worth of shares under its existing program. It also announced plans to form two new digital commerce divisions.

Alibaba’s share buyback program

Earlier this month, Alibaba’s stock rose after the company announced its largest share buyback program to date. The Hangzhou-based e-commerce giant said it would repurchase at least $6 billion of its shares this year. The plan is expected to boost its earnings per share (EPS) by at least 17.3% over the next five years.

The buyback program is part of a series of measures the company has taken to help prop up its falling share price. It comes as the internet giant faces continued tightening of regulations by the Chinese government. The company has also been hit by slower-to-no growth and a maturing e-commerce market.

During the past seven years, the company has launched several multi-billion dollar buyback plans. It has repurchased shares to offset stock-based compensation.

Alibaba’s fiscal first-quarter revenue of $30.7 billion

Despite its recent slowdown, Alibaba’s revenue was better than expected. The Chinese e-commerce giant reported a profit of $22.8 billion in its fiscal first quarter, compared to $45.1 billion a year ago. The company also repurchased $18 billion of its stock under its existing buyback program.

The firm reported revenue of $30.7 billion in the fiscal first quarter, a decline of 1.5% compared to Wall Street’s estimates. It also attributed weak performance to the resurgence of the COVID-19 anti-counterfeiting campaign.

Despite the weak growth, the company saw a 10% rise in its Cloud business unit. The Cloud unit generated US$2.6 billion in the first quarter. The cloud unit is seen as a future growth driver for the company.

Alibaba’s revenue in its flagship Chinese commerce business declined by 1% year over year. This segment mainly includes marketplaces that cater to international wholesale markets. A decline in AliExpress orders in Europe contributed to the revenue decline.

Alibaba’s pricey stock

Earlier this week, Alibaba’s pricey stock took a beating. The e-commerce giant reported revenue of $29.1 billion in the first fiscal quarter of the year, down 6% from a year ago. The company also announced plans to form two new digital commerce divisions. To top it off, Alibaba increased its share buyback program by $15 billion. The company has already repurchased $18 billion worth of stock under its existing program. The stock is currently trading at an attractive $133.47, up 4% from the day before. With a price-to-book ratio of just a tad over three, it seems like a buying opportunity. The aforementioned ad hoc snafu was exacerbated by news of the Chinese government’s plan to roll out mass testing rules on a scale that could be applied to the entire country, rather than just a few provinces.