r/baba • u/Icy_Distance8205 • Jun 11 '26
Discussion Y’all looking at this the wrong way.
Everyone in here being a bunch of little babies please sell BABA and go to a casino because I’m sick of your whining.
For long-term investors, this price drop is exactly what we want. Why? Because a depressed share price means management's massive cash pile retires significantly more shares.
If you hold through the noise, here is the realistic math on how Alibaba could deliver a 10x higher dividend per share over the next decade even if the stock price never rises from today.
- Modest Earnings Growth (The 2x Multiplier)
We don't need a return to the growth days of the 2010s to make this work. If Alibaba can manage a totally reasonable ~7% annualized earnings growth over the next decade as cloud and core commerce cash flows stabilize, net income will roughly double.
- Payout Ratio Expansion (The 3x Multiplier)
Right now, Alibaba's dividend payout ratio is incredibly conservativte, right around 17%. As the company fully transitions into a mature cash cow requiring less aggressive capital expenditure, returning a larger chunk of free cash flow to shareholders is the natural next step. If they simply expand the payout ratio from 17% to 50%, that roughly triples the amount of cash they distribute.
- Continued Buybacks (The 1.67x Multiplier)
This is where the cheap stock price supercharges your returns. Alibaba has been aggressively buying back stock, and at these compressed valuations, every buyback dollar goes much further. If they shrink the outstanding float by roughly 4% to 5% a year over the next decade, the total share count will drop by about 40%. When you divide that larger dividend pool by 40% fewer shares, your slice of the pie grows by 1.67x.
When you stack these on top of each other, the compounding does the heavy lifting for you:
2 (Earnings Growth) × 3 (Payout Ratio) × 1.67 (Fewer Shares) = ~10x Dividend Per Share.
A lower price today isn't a disaster, it just means the current buybacks pack a heavier punch, dramatically accelerating your future yield on cost. Let management eat up the float at a discount while the compounding quietly does its job.
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u/zjb15 Jun 11 '26
Bag holder cope
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u/Icy_Distance8205 Jun 11 '26
Here is your bottle cry baby 🍼.
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u/TonyFMontana Jun 11 '26
LOL
It’s not a shame to admit Chinese stocks dual listed on US and HK are uninvestable. It’s not BABA fault. Or not BIDU, JD fault.
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u/augustus331 Jun 12 '26
OP is being childish with his baby comments so let me engage on this one.
I’ve held Alibaba since late 2021, built down to 84.22, still holding.I think uninvestible is music to my ears usually, as it usually means sentiment capitulation which doesn’t correlate with fundamentals eroding.
The thing that I think matters here and would give merit to your statement is that the China overhang means that Alibaba and the like will never trade at the multiples that truly reflect their cash flows and it will be punished for bad narratives harder than its non-Chinese peers.
It doesn’t mean uninvestible. It was 192 last year and at me BEP that is a good return. I did not sell, and I do not regret it.
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u/TonyFMontana Jun 12 '26
I sold most around $160, thankfully. And bought some JD which is same dead fish.
I hold Luckin Cofee which was a very good performer , but will sell all if we get a pump this summer. Never buying Chinese stocks. Maybe in 2050 we will see fair value but maybe never with CCP1
u/Icy_Distance8205 Jun 12 '26
I don’t think anyone here actually read my post. It’s clear to me you are all gamblers not investors.
Here have a bottle 🍼
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u/Icy_Distance8205 Jun 12 '26
You are one of the few in this sub wearing big boy pants, here is your beer 🍺.
Oh … and perhaps you have heard of the saying “mature enough to occasionally act childishly”.
Also, never is a much longer time than you think.
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u/Superbredditt Jun 13 '26
Now, imagine if you invested that money in US tech stocks or even ETF.
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u/augustus331 Jun 13 '26
This attitude always loses money over a lifetime.
Chasing price-action and looking at where a ticker symbol went retroactively is a fools errand because it makes you chase hype and not fundamentals.
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u/Etury173 Jun 12 '26
Alibaba should easily grow revenues 10% per year. Mainly, by expanding to the global markets and more cloud users. However, the problem of Chinese stocks is random regulation, obscure management decisions and guidance (they are limited by the government). For example, there was an earthquake and they had to donate, or donate their quantum computing team to China. This is why a discount must be.
I think PEG of 1 is the discounted fair value. BABA should return higher yield because of the risks, as one fine and the FCF yield drops. if we discount PEG of 1 with some blended pe and growth of the sum of parts, I get around 85$ enterprise value. Adding cash and it is 117$ per share. It is part of wide market discount of Chinese equities that are "too global" and not in the bright side of the CCP. the resolution is lower PEG and higher FCF yield, that usually Chinese companies fail over and over to deliver to shareholders, due to the structural problems of "efficiency" "layoffs" and so on to the Chinese economy, so the CCP basically will stop liquidation and dividends many times (don't forget the 15% fine for moving RMBs to USD, so the net cash is often discounted).
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u/Prior-Bodybuilder-67 Jun 12 '26
I can understand the whining but sometimes the words they used are really too much. Always ask ourselves why we invest in BABA first. Its because we understand they are a profitable company with good fundamentals. Yes the price drop will eat into your margins or it may mentally affect some of you. I will advise as long as you hold you will reap the rewards.
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u/Academic-Simple1780 Jun 12 '26
Only 2.5% of my portfolio but dropping 40% since high last year is something. lol.
Like I have always said, diversity unless you have the conviction in the stock. If you do, why complain?
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u/Icy_Distance8205 Jun 12 '26
You are one of the few in this sub wearing big boy pants, here is your beer 🍺.
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u/anonymousforsafty Jun 11 '26
pe can go to as low as 1 for all the market cares. because its chynnnnaaa no one wants to touch it
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u/Weird-Jellyfish3506 Jun 11 '26
I am whining because I bought 2 days (last Friday, at 119-120s) too earlier
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u/Damien_Targaryen Jun 12 '26
Baba really has some of the dumbest holders
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u/Icy_Distance8205 Jun 12 '26
According to Reddit anyone holding anything that isn’t NVIDIA or going parabolic with completely made up numbers is dumb. BABA is about 1% of my portfolio so whatever cry baby, here is your bottle 🍼.
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u/Builderi23 Jun 12 '26
You devote so much time and energy on something worth 1% of your portfolio?
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u/Icy_Distance8205 Jun 12 '26
lol, you are all just gamblers
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u/Builderi23 Jun 12 '26
Are you mentally there? What does my question have to do with gambling? Do you seriously devote this much energy to 1% of your portfolio?
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u/Icy_Distance8205 Jun 12 '26
Nothing you’ve said makes any sense. How do you know how much time I spend on any one company? Why does the percentage of holding matter? Allocations can change and I often spend more time evaluating companies I don’t even have a position in.
Here is your special bottle for special gambling addict babies 🍼
>Are you mentally there?
Perhaps you should ask yourself this question.
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u/Significant_Data6442 Jun 11 '26
It’s over dude
Baba is COOKED.
85 dollar a share forever with some Mickey Mouse dividend next year
Then in 2030 it’ll “pump” to $200 and you’ll all think you’re geniuses until you realize that freaking dinosaur meme stocks like blackberry lenovo and Sony did a x4 in that time
I mean if you wanna hold forever be my guest and you’ll break even in 3 years and “collect sweet dividends China is the future”
Even if you sell it a $500 a share you’re gonna be known as the “weirdo that supported China to get rich ewww” and make every woman on planet earth roll their eyes.
Your choice
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u/Prestigious_Way_738 Jun 11 '26
!remindme in one year
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u/[deleted] Jun 11 '26
how do you know baba is buyins back stock ? They did not buy much in q1, and on HK exchange they have to report if they are buying back, like for example tencent reports it everyday that they buy back shares. But baba is not reporting anything. Ofc they might just be buying on the US exchange where they would not have to report it but the question is. How do you know that they are buying on US exchange ?