Alibaba: Still Not A Buy (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Seeking Alpha Analysts and Wall St have been mostly bullish on Alibaba. But I am not as enthusiastic yet.
• Overall sales growth have been slow. This has been mostly due to underwhelming growth in two-thirds of the business; the China Commerce and Cloud segments, which have lagged China GDP.
• Leading indicators such as Retail Sales, Consumer Confidence and Business Activity PMIs don't support a case for a growth rebound in the key segments.
• The stock is still plagued by uncertainty and negative surprises, as evidenced by the cancellation of the value-creating Cloud business spinoff and resignation of the to-be head of the Cloud business.
• Valuations are undemanding, but I assert that that is insufficient; a turnaround in business momentum is required to support the buys. I believe the margin expansion story is not enough; a growth revival is needed.

Read the full article here.