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Is it Time to Dispose Alibaba Group Holding Ltd?


What’s coming up for Alibaba Stock? Markets have been beating  Alibaba Group Holding Ltd on fears of an economic strike in China. On the other hand, the loss to Alibaba stock is like a temporary problem, which presents an outstanding opportunity for profit-hungry investors.

“Alibaba is mistakenly caught in the crossfire; some major institutional players are thinking along the same lines. Don’t get me wrong, the Chinese stock market crash is definitely going to affect BABA stock, but I think investors have misread what that impact is going to look like” stated by an analyst.

The Chinese stock market decline is more a story of extreme leverage and government mishandling than it is of lost earnings. It’s not like the market had overrated Chinese stocks on a fundamental basis. Investors had just increased their bets after margin trading became legal in China, according to reports.

Then the Chinese administration tried a very forceful approach to control the leverage, which only headed to more fright and a massive stock market decline. That was  sometime in 2015 and then things simmered down for a bit, but the fear come up several weeks ago.

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Alibaba’s International Focus

Alibaba has transformed itself, over the last few years.  Gone is the domestic titans whose sufficient operations remained on the other part of the globe. It developed, under the management  of Jack Ma, a global corporation with abundant financial resources  and comprehensive goals. 

The main turning point for Alibaba was the cross-listing of its stock on the New York Stock Exchange in what was the biggest initial public offering (IPO) of all time. By moving into U.S. markets, Alibaba was efficiently proclaiming itself a force to be counted with.

“What’s important to note in valuing BABA stock is that China’s stock market is not symbolic of the Chinese economy. The relationship between the two may seem strange to Americans, but that’s because our stock markets are significantly larger” according to reports.

He added, “The U.S. stock market is one-and-a-half-times the size of the American economy. That is to say, the collective worth of publicly listed companies exceeds the size of the U.S. economy economy by an order of 1.5.”

“This stands in stark contrast to China, where the stock market is only half the size of the economy. Therefore, a Chinese stock market crash, while harmful, only affects the people who had enough money to invest in Chinese stocks in the first place. The wide majority of Chinese citizens are probably unaffected.”

There are parts of the real economy (actually producing goods and services) not the financial economy, that could still keep developing in Alibaba’s favor.  That is the reason why institutional investors like RBC Capital Market held on to their  “Outperform” ranked on Alibaba stock.

This year, RBC has a $95.00 price aim on Alibaba stock, proposing a 36.5 percent gain. Which would be extremely beneficial to the company’s long-term route, not to mention its stockholders. However, where is the development coming from?

Several analysts approve that increasing Internet access in China is going to gain big rewards for Alibaba. As China’s biggest e-commerce retailer, Alibaba estimates the rural market could be valued $74.0 billion in the year 2016.

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By supplying products to this new consumer market, the company could also supply Alibaba stock some serious revenues.

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