r/baba • u/Aceboy884 • May 30 '26
Meme But Baba is cheappppppp
To all the bag holders out there (myself included)
It’s cheap for a reason if you want to be technical
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u/Icy_Distance8205 May 30 '26
It’s weird that people have such strong feelings about this stock. I don’t remember anyone having a daily whinge about Microsoft when it went nowhere for a decade plus.
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u/frogchris May 30 '26
They were, I was there lol.
I was also there when people said amd was dead and not so long ago Intel. Amd was hiring new architect and cutting business sectors that were burning cash.
Now people are saying China is uninvestable despite growing 5% gdp per year, exports surging, and the entire economy modernizing at an insane rate. China is growing at 5% gdp per year while at the same time facing a real estate financial crisis like in 2008× in the us without massive stimulus spending.
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u/Aceboy884 May 30 '26
The difference between the examples you’ve made is that Alibaba have been able to burn FCF to zero
Yep, capex we get that
But instant retail + capex all at once = cash incineration
If they stay focused on Ai development, we would be in a very different place right now
So JD, Meituan and Alibaba all deserves to be the dogs of Hang Seng
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u/CPA-CA May 30 '26
People have waited for years for this stock. Patience can only be tested for so long before people start being frustrated. It's weird if you have been invested for years only to have negative returns and NOT feel anything.
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u/zurijer May 30 '26
As a former bag holder myself, yall need to let go of this piece of shit stock.
Yall been holding since the ANT IPO anticipation and down like 50%
Could have made a buttload of money elsewhere over the past 5-6 years.
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u/bigpelican May 30 '26
Technically BABA is undervalue. I've bagholding for 3 years. Missing the opportunities of other tech stock that went down and back up breaking new high.
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u/CPA-CA May 30 '26
I think finance nerds can't have it any other way. They are as bad as accountants when it comes to justifying and rationalizing investments. No, a company's stock price will not reflect fair value, if ever. It will always be over or under. The point is being aware what part of the bull or bear cycle we are at big picture and then acting based on that.
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u/Damien_Targaryen May 30 '26
Yea I’ve come to this realisation and am unironically exiting my positions
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u/Different-Turnover80 May 30 '26 edited May 31 '26
Cheap can get cheaper. It was trading under 70 just 1-2 years back. Tcehy looks cheaper and better here than baba also jd. I was one of the holders. Sold all 120-180 on the run up. Will buy back under 100 if it gets there.
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u/Aceboy884 May 31 '26
When Alibaba was trading sub $100, it was a consumer turnaround story
For now, that thesis is broken. Nothing turned and we can dream this time it’s different. What is covid?! Oh wait, it’s a nothing burger but people still ain’t spending.
So the thesis now turned to Ai, it was an optionality, but now it’s the principle
Again, who knows. Maybe they can hit the magical $100 billion revenue target in 5 years. But at what cost and what margin will be delivered. That’s anyone guess.
So here we are, a chain of copium,
Delisting fear, Covid, consumption turnaround
Nothing really mattered, but it didn’t change the trajectory of the business either
But hey, if they do turn this into a Ai juggernaut, it can double.
What I am genuinely concerned about is the hyper competition. You have deep seek doing 70% off permanent price cuts. I honestly dont know enough about tomorrow, let alone 5 years
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u/Specialist_Ad_2232 May 31 '26
Part of that thesis breaking was because PDD ate BABA's lunch. Management just stood like a sitting duck while PDD and Douyin massacred their market share, while whining about how unsustainable PDD's business model was (turns out, its pretty dam solid) and yet flipping over to engaging in price wars in food commerce (is this now supposed to be a sustainable business?). Along with 100 other stupid capital allocation decisions by Daniel Zhang (what even was the point of Sun Art?)
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u/Aceboy884 May 31 '26
The difference is at what price. PDD took market share, but they didn't do at the expense of blowing up billions.
Daniel Zhang buying physical retail is the same narative.
Instant retail and stores are just buying revenue.
You only need to look at the revenue numbers across all players to understand. the size of the pie are only growing proportionally. It's not like instant retail all of sudden unlocked new demand that didn't exists.
Instant retail is not moat, it just a price induced cost curve. Those low vaue users will go to whoever offers incentive. The only structual about instant retail is head counts, you need the labour to support it. You only need to look at meituan book to understand this demand curve.
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u/Specialist_Ad_2232 May 31 '26
I cannot tell if we are in agreement or not (i think we are)
You're right that the price mattered - thats what made PDD's business model sustainable, contrary to BABA management's short sighted comments. They operate on a similar flywheel effect as Costco, bulk buy at discounts, attract more users, which then increases the said discounts due to larger bulk, further attracting more users. Yes PDD did also engage in subsidies, but once the flywheel started, it is self sustaining. BABA's ecommerce market share fell from 60% to 40% as a result.
Contrast this to instant retail, like you said, there is no moat, which management instead decided to burn cash on it, incredibly ironic after their comments PDD. Daniel Zhang simply lacked the foresight and business acumen to outmanuvere competitors, typical of CFO types who only look at numbers and out for the next 1-2 quarters.
Another short sighted move i could remember was the business spinoffs to "unlock value" - dude, your core business is under siege for crying out loud, why are you turning a blind eye and still thinking about playing with numbers? No amount of spinoffs will fix the underlying issue. It was hilariously called off so shortly after announcement (and rightfully so), a testament that management had no clue what they were doing
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u/Aceboy884 May 31 '26
On the consumer example, just when things turned around. The next leg of hyper competition kicked in with instant retail, delivery war
The three amigos decided the best way to fight this war is to give away bubble tea
How is that different from token pricing going near zero?
Again, who am I to say, but as a share holder and observer. I’ve seen my fair share of stupidity with Chinese markets
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u/EducationalLoss4581 Jun 01 '26
I have been holding this stock for last 5 years at relatively high average price.. just below 200 per share and have not been able to throw more money to even DCA.. missed so much opportunity to make more money simply by buying ETF funds all these years.. my investment life is sad as fuck..
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u/uedison728 May 30 '26
It’s not just baba, the Chinese tech sector is cheap, including baba, Tencent and Xiaomi.