In this video, I will be talking about Alibaba (BABA 0.64%), the reason Charlie Munger sold 50%, and why Wall Street analysts still like the company. You can find the video below, but here are some highlights.
- Earlier this year, Charlie Munger doubled down on an investment in Alibaba Group Holding for the second consecutive quarter.
- A couple of quarters later, he sold 50% of his position at a 20% loss. Whether he was forced to sell or converted to Hong Kong shares remains to be seen.
- Wall Street has been super bullish on Alibaba stock for quite some time now. Among 16 analysts, only one holds a sell recommendation. All the rest hold a strong buy stance. The average price target for the next 12 months is $174, which implies an expected upside of more than 80%.
- Last quarter the company said it has reached a total of 1.28 billion annual active consumers.
- EPS came in at $2.65, down 23% year over year (YOY) but ahead of estimates of $2.55. Revenue came in at $38.1 billion, up 10% YOY but below estimates of $38.9 billion.
- Market research firm IDC expects the cloud industry in China to grow by a compound annual growth rate of over 30% until 2025, reaching $87 billion by 2025. Alibaba expects that number to be more than double at $157 billion. Alibaba Cloud has a 37% market share in mainland China.
- Alibaba's growth is slowing down, and investments in various areas hit its bottom line. Investors should take all of this into consideration as well as the China risk surrounding these stocks.
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*Stock prices used were the closing prices of April 14, 2022. The video was published on April 15, 2022.
