BABA - Embedded Expectations Analysis - 2018 03 02
ï€ Alibaba Group Holding Limited (BABA:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 24.8x Uniform P/E. However, even at these levels, the market has bearish expectations for the firm, and management has concerns about the sustainability of growth, their algorithms, and merchantsï€ Specifically, management may lack confidence in the sustainability of robust growth in their China commerce retail business, and may have concerns about greater than expected gross margin headwinds resulting from the consolidation of Cainiao. Also, they may lack confidence in their ability to improve their algorithms to meet customers' current demand and also create new demand, and may also be exaggerating their focus on creating a native experience for their customers as they monetize their pages. Finally, they may lack confidence in their ability to continue applying new technologies into the real commerce world, and may be overstating their ability to drive revenue growth through ad inventory that they haven't yet monetized
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