The Real Problem Facing Alibaba

Alibaba Group Holding Ltd BABA stock has been on a gradual decline over the last three months, losing more than 26 percent in that time-frame. With recent news regarding fake listings on the website, the shares are now on the cusp of breaking the $80 level.

Gil Luria, Wedbush Securities research analyst, who has a Buy rating on the stock was on CNBC recently to discuss the recent problems concerning Alibaba.

Fake Merchandise And Volumes

"In terms of the fake merchandise, that's well known, Alibaba is combating it," Luria said. "But it's a long journey and eBay and Amazon took many, many years before they got all the inauthentic merchandise out and then in terms of the fake volume, those don't really impact the economics, they don't generate any revenue on those and so it doesn't really impact the economics."

He continued, "Economics are driven by Chinese consumers wanting to buy more and they are trying to combat that just like Google tries to combat people doing SEO and trying to gain in search, Alibaba is in the same boat, they have to constantly chase down these retailers that are trying to game their system to get their results up on TaoBao and it's going to be ongoing, I don't think it has gotten any worse."

The Real Problem
"I think that possibly politicians in China and in Taiwan are trying to flex their muscles. Alibaba has gotten so big, Jack Ma has gotten so prominent that I think there is a sense that maybe they need to get put in their place. I think that is all it is," Luria remarked.