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Alibaba Fights Back Against Barron's 50% Downside Story

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  • Alibaba is fighting back against suspect analysis in a recent Barron’s article that suggests another 50 percent downside to Alibaba’s share price.
  • In an open letter penned by Alibaba Vice President Jim Wilkinson, Alibaba argues that statistics and conclusions made in the article are unfair and misleading.
  • Alibaba shares are already down 40 percent in 2015.

Over the weekend, Barron’s published a story entitled “Alibaba: Why It Could Fall 50% Further” that included some potentially market-rattling commentary by analyst Jonathan Laing. Apparently, Alibaba Group Holding Ltd (NYSE: BABA) disagrees with Laing’s conclusions. The company penned a lengthy open letter to Barron’s describing in detail no less than seven objections to Laing’s analysis.

In an email statement to Benzinga, Alibaba VP of Global Media Robert Christie said, “We want Barron’s to set the record straight in its reporting about Alibaba. We provided Barron’s with a detailed letter that outlines the many factual inaccuracies, the selective use of information and the conclusions that were drawn that are misleading our shareholders.”

Related Link: Alibaba VP: Here's Why Barron's Is Wrong About Our Stock

One of the major objections that the letter’s author, Alibaba Senior Vice President Jim Wilkinson, has with the Barron’s piece is the unfair valuation comparisons between Alibaba and eBay, which Wilkinson sees as an apples-to-oranges comparison.

Alibaba’s PE of 23.6 is currently much higher than eBay’s PE, but it is in-line with the PEs of Chinese Internet rivals Tencent and Baidu Inc (NASDAQ: BIDU).

Shares Respond

Alibaba shares are already down 40 percent in 2015, including a 4 percent drop on Monday following the Barron’s story. Shares were up more than 3 percent in Tuesday's session.

Alibaba shareholders are bracing for a tough one-year anniversary of the largest IPO of all time. The latest economic data shows continuing weakness in the Chinese economy. In addition lockups of a staggering 1.6 billion shares of Alibaba expire on September 20, leaving the shares free to be sold on the open market for the first time.

Disclosure: the author holds no position in the stocks mentioned.

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