Alibaba: A Value Trap Behind The Headline Growth
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Eastern Value1 FollowerFollow5ShareSavePlay(14min)CommentsSummaryAlibaba's e-commerce market share is rapidly declining due to intense competition.Intense competition also forced BABA to invest heavily in cloud infrastructure and offer attractive subsidies to maintain user traffic.Inefficient hardware, a limited-profit open-source AI model strategy, and ineffective ecosystem integration all make AI a trap for Alibaba.Alibaba is engaged in the war with multiple giant companies in multiple fields. Those competitors have deeper moats and stronger business fundamentals.Giving a Sell rating on BABA for long-term investors due to the decline in core business and high expenses with uncertain returns.Editor's note: Seeking Alpha is proud to welcome Eastern Value as a new contributing analyst. You can become one too! Share your best investment idea by submitting your article for review to our editors. Get published, earn money, and unlock exclusive SA Premium access. This article was written byEastern Value1 FollowerFollowI am a technology professional and individual investor who has lived in China for decades. Through my practical observation of the Eastern economy, I can offer on-the-ground perspective and in-depth analysis of companies from the East. My investment philosophy is long-term investing, with a focus on business fundamentals. I regard myself as a potential owner of the company, so I focus on fundamental valuation, including cash flow, business model, competitive environment, and management philosophy. Furthermore, before making actual investment, I will personally experience the company's products, observe consumer behavior, and continuously evaluate the company's business in my daily life. My professional background is in the technology field. I have a Bachelor of Science degree in Computer Science. I currently work for a large cloud service provider in China. This allows me to analyze a company's technological competitiveness and actual business situation beyond financial statements and data tables. My primary research focuses on the internet, technology, and consumer sectors in the East. I aim to find high-quality companies with reasonable valuations in these fields, find potential turnaround companies, and also find potential opportunities in my daily life. I join Seeking Alpha to provide a realistic picture of Eastern companies, which is exactly what Western investors need. I hope to share information and insights about actual business operations that financial reports miss. I also hope to receive suggestions and feedback from the community.Analyst’s Disclosure:I/we have a beneficial short position in the shares of BABA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.