1/ Been following $BABA comments on FinTwit, not an expert but some observations and thoughts:
(1) Lots of ppl selling seemed to have bought the stock speculatively; assuming it'll go up and to the right
(2) China experts I've spoken to think the 13% drop is a major overreaction
(1) Lots of ppl selling seemed to have bought the stock speculatively; assuming it'll go up and to the right
(2) China experts I've spoken to think the 13% drop is a major overreaction
(3) IMO if your primary source of info is the WSJ that's probably a red flag. Owning $BABA probably requires either first hand research and a network of experts. If not, then your going to be out arbitraged based on information flow alone (let alone the follow on analysis)
(4) In general, ppl have a hard time pricing political / regulatory risk. Ie. I'd approach it as a 20% chance of a 30% decrease in future cash flows = 6% discount to current price. Unable to calculate the risk, ppl bifurcate it as 0% or 100%. The latter sold their shares
(5) Hopefully if you're buying or holding $BABA the China / CCP risk is baked into your target price. And, you have solid thesis on why market expectations are misaligned. For me personally, the news over the past few weeks hasn't isn't surprising and will be doubling up :)
(6) My current predictions is that CCP will slap several minor fines on to $BABA and a lot of their anti competitive tactics will be banned. There will be no expropriation or divestures. $BABA will continue to be a start-sponsored champion and be in bed with the CCP
PS. I generally think ppl generally overestimate risk in China and underestimate it in other markets (driven by the media). Below is an example of the risks for $SE but I'm not sure if most investors have spent a ton of time pricing this
https://twitter.com/ProtagorasTO/status/1332339471224889344?s=20
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