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Alibaba Bull Or Bear: What's Josh Brown's Biggest Problem With The Stock?

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Alibaba Bull Or Bear: What's Josh Brown's Biggest Problem With The Stock?

Shares of Alibaba Group Holding Ltd (NYSE: BABA) were up only 4 percent despite reporting impressive quarterly results. According to Josh Brown, CEO of New York City-based Ritholtz Wealth Management, this is the biggest problem with the stock.

"If this would have been an American company, the stock would have grown 15–20 percent something like Amazon.com, Inc. (NASDAQ: AMZN) will do, but it is only 4 percent," Brown said on CNBC.

Brown, who owns Alibaba shares, noted that the skepticism around the stock, particularly in regard to it being a China stock, doesn't allow good news to form a supported base the way it would if it were an American stock.

Related Link: If Alibaba's Profit More Than Doubled, Why Is The Stock Stagnant? Bloomberg May Have The Answer

Brown continued that from a fundamental point, there is lot of room for skepticism, like GMV of $115 billion. But, he noted that 423 million active users is a huge business, and its cloud business is coming on strong as well.

For the fourth quarter, Alibaba saw rapid expansion in its cloud computing and Internet infrastructure business, with revenue increasing 175 percent year-over-year to RMB1,066 million (US$165 million).

"They have 500,000 paying customers using their cloud service which is kind of getting involved with Amazon's cloud service four years ago. So there is lot of positivity," Brown highlighted.

Commenting on Jim Chanos shorting Alibaba, Brown said, "I don't necessarily disagree. Jim has done a lot of work on the name and the accounting issues are pretty well known. This is a kind of low conviction."

"For a trade, I think it is a decent hold here," Brown noted.

Shares of Alibaba closed regular trading Thursday up 3.97 percent at $78.83.

Latest Ratings for AMZN

DateFirmActionFromTo
Apr 2021Credit SuisseMaintainsOutperform
Apr 2021BMO CapitalMaintainsOutperform
Apr 2021Wells FargoMaintainsOverweight

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