Is BABA Stock a Buy in 2021? Alibaba Stock Analysis and Long Term Forecast
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- Опубликовано: 5 авг 2024
- This video is a fundamental Alibaba (BABA) stock analysis from the fiscal year 2021. In this BABA stock update we'll take a look at financial results as well as an estimate of the future value and possible investment return based on a discounted cash flow (DCF) and EV / EBITDA market multiple approach.
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0:00 Alibaba Stock Crushed
0:41 The 5 key attributes to review BABA stock
01:31 Financial results for Alibaba 2013-2021
We're going to take a look at Revenue, EBITDA, EBITDA Growth, Debt st + lt, Excess Cash, Market Cap, Enterprise Revenue, EV/EBITDA, Net Debt/EBITDA
06:06 BABA Cash Flow 2013-2021
We're going to take a look at CFO, CAPEX, Debt Issue (PMT), FCFE, Shares, FCFE/share, price/share, FCFE Yield
09:46 BABA long term forecast
18:42 Should you buy Alibaba stock? Final review
Value Investing, Private Equity Valuation, Corporate Finance Valuation, Rational Investing, Cash Flow Investing
NYSE: BABA
-- Disclosure --
All opinions expressed by Cameron Stewart on this show are solely Mr. Stewart’s opinions. You should not treat any opinion expressed by Mr. Stewart as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Mr. Stewart’s statements and opinions are subject to change without notice. Past performance is not indicative of future results. Mr. Stewart does not guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this show. Before acting on information on this show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.
#Alibaba #BABA #stock #StockMarket #Investing
Confirmation Bias Confirmed! 40% of my portfolio is BABA. I'll see you all on my yacht or in my cardboard box 10 years from now!
LOL 40% of what?
Lol
Lol same here. Roughly 40% of my stock portfolio worth but only about 4-5% of my net worth. A massive part of my financial future at this point
Yikes 😬 You have more faith in the Chinese government than the rest of the world
@@Curtis69213 a deal is a deal no matter where on earth it is
I'm aiming for about 3% of my portfolio in this one. A real gem. Run in the opposite direction of the crowd!
Your ratio of subscribers to views is LEGEND Cameron. Shows how much we value your content. Either 50% of your subscribers make time to engage your insights. Or 50% of those that come across your content subscribe. Either way - shows the value we derive. Thanks for the no hype, investment guidance
Thanks for saying that! It's been a wild year and lots of fun doing the channel. Cheer!
Thanks for your assessment of BABA, Cameron, and for all your help throughout the year. Have a merry Christmas and a very happy 2022. I'll continue to average down on BABA, my current average price is about $165.
I've been waiting for this video for like 6 months thank you Cameron!
Cash flow is also higher than EBITDA partly because they actually EARN interest income not PAY it. They hold onto merchants transactions cash for a few days before paying it out and they earn interest on that. With over a trillion in GMV, that's billions of interest income. Cameron attributed the difference to share-based comp, but this interest income is really important.
I agree but EBITDA is bullshit
Float is wonderful
Thanks Cameron! Agree with your analysis, this week investors day will be for BABA for those interested.
Came across your channel recently and what a gem I found. Thank you for what you are doing and cheers from Singapore.
Thank you Cameron, I love your videos, I will purchase you course soon!
Well, if you assume that Alibaba's cloud biz (leader in China) actually becomes successful division, then the margins are likely to go back up. This is a very likely scenario, moreover Cloud is growing in mid 30s and should contiue to do so. Your take is indeed very conservative! Appreciate the video
Great analysis. Awesome to have a CFA provide an unbiased analysis. Conservative in your figures - but good nonetheless.
Thank you Cameron. I appreciate you sharing your thoughts. I would like to request something like: Cameron's Top Picks for 2022.
Really enjoy your videos Cameron. I would add a ROIC vs WACC analysis to try and establish if a moat exists within a business.
Meticulous analysis, thank you Cameron for sharing your work!
Hi, thanks for the video! One of the best on youtube. Why do you use only short them investiments and nog also Cash and Equivalents? i.e. its 49,664 in 2021. can't it be used to level out debt? Keep on going with the videos! Thumbed up!
Hi Cameron, thanks a lot for your analysis, I like your conservative approach. Alibaba is definitely a monster, it's terrific. Regarding the delisting risk, just make sure your broker can transfer your shares to the HK stock exchange ...
To all the young investors out there - this is the way a market feels when it is going down hard. When do I buy, should I buy, will it ever recover? Will other stocks also do this? It's a wild ride but its certainly what we live for.
Good point. One thing that feels different though is that during market crashes just about everything is crashing and that feels a lot worse to most people.
Lol the market is barely even down
Great video as always Cameron! I would like to see you review The Trade Desk (TTD) and Amyris (AMRS).
Hi Cameron, great stuff as always. Could you be so kind and do analysis on Disca? (I know AT&T merger is an uncertainty there but still, would be much appreciated). Thanks, keep up the good rational stuff!
Solid research and projections as usual! I’m down $13,000 on my BABA position and recently shared a video on the risks.
Good luck Brian. I think BABA has further down side risk than upside potential, given the political environment there. May be it is time to cut your losses.
Would love to see what you think about BTI / BATS (British American Tobacco)!
Love you man, been watching for a long time.
Nice to see the consensus on BABA holds across several value analyzers like yourself. Thanks for your input. Now, if we could only fast forward to see what world events have in store for markets.
My biggest concern is a deep recession in China hitting baba earnings hard. China hasn't had a recession in 20 years and no one seems to be talking about this possibility but they just pumped up the biggest housing bubble since 80s Japan. We are talking media home prices at 40x median income, that's insane. More houses than people. The invest in houses instead of stocks. Now it's all unraveling, countless bankrupt property developers. Seems like big pain ahead for China as that bubble bursts. Baba will eventually recover and thrive but in this scenario it could still dip hard and take a couple years to come back.
Thanks for the analysis. It may be time for me to take another look at it.
picked some up today under $118... this will be an interesting ride
atleast you got it at a bottom
@@triple_gem_shining yea it was a good price for today, although last week baba hit $109 😅
@@JohnHobitakis yea I know I've been watching it.
Hi Cameron, thanks for the great content. I really appreciate all the effort you put in it. Could you do an analysis on Walt Disney on one of the upcoming videos?
I think you should add moat to your 5 point checklist, because a company losing its moat could mean get profits trimmed and not achieve growth expectations
Very Good analysis, this channel is amazing!
Hey, is there anyway you can do a video on what is going on in the market? A lot of volatility and there is much noise about Rate Hikes.. Can you do like a deep dive into Rate Hikes and the performance/impact on stocks?
Great analysis. Subbed
Hi Cameron, thank you so so much for the videos!!! Can you do some qualitative analysis as well? For example, the competitive advantage of the company, what is the MOAT, what metrics do we look for XYZ industries. I read investing books myself and I just want to hear your perspective.I am also doing the CFA : )
Glad to see Cameron back
Hi Cameron! thanks for the video! What's the risk of ABB being delisted? If they do, what would be the loss when converting the shares to Honkong Exchange?
Thank you! What is your IRR untill 200usd?
Thanks for all your great work
Yes Cameron! This is what i want, a video from you this evening. Thank you man!
The one we've been waiting for
How about doing AES Corp and maybe Nextera Energy too? Thanks for the BABA valuation.
Pinduoduo (PDD) would be interesting to cover as well
Great analysis, thank you
thanks Cameron! great video as always!
These days there is a lot of talk about BABA delisting - Is it better to convert BABA right away to the OTC option BABAF? or is it better to convert them to the HK equivalent? or is it better to hold these ADR stocks as is and decide at the time of delisting - hope its not too late then? Any guidance??
If the stock is delisted, the price will fall regardless of if you own the HK equivalent or not, until there is a real serious threat of delisting (i.e. there is actually legitimate factual information) it is not really worth the hassle.
The same BABA shares you own are listed on HK (3rd largest market in the world), Frankfurt - you can trade them OTC, HK or Frankfurt if ever BABA gets delisted.
If I was a buyer, what are pros/cons of the HK shares?
Great video, thank you!
Cameron, how do you account for the Variable Interest Entity (VIE) risk? When you buy into $BABA, you do not own the underlying company in China as foreigners are forbidden from an ownership stake in a domestic company.
Great presentation that benefits me for sure.
Is there a disconnect between the actual market cap of Alibaba and what is listed on brokerages and websites? I was under the impression the market cap was 300 something billion
Cameron- thank you. Very helpful. Question- if you calculated a 10 year annual return with just purchase price and exit price you get 14%. I know you get 25% because you credit yourself the intervening FCFE. BUT, is that really allowed? Maybe yes for a US company which will in some sense “ return cash” to shareholders eventually. But with Baba, etc, shouldn’t the understanding be that they will always invest it in SOME venture eventually, which may/not succeed. In that case, isn’t 14% the more real return number? Thank you
thank you for this video :D
Thanks for video! Very nice job.
Thank you!
Be good to get an update on this incorporating buybacks and $1 dividend/ share.
Great video. Yes it looks good. What about QCOM?
May I ask why numbers are not discounted back to Net present value?
thank you for this analysis!
Just a quick note. I think you should assume that they continue to provide stock-based compensation. So when figuring the future stock price, perhaps we should assume there will be more shares outstanding in 10 years. Just my thoughts.
But they're buying 3-5 Bn of shares/quarter. Also there share based compensation is not as egregious as us counterparts.
Excellent point!!!
exactly this. Since he took to exclude the compensation from FCFE path, he should be projecting increasing share dilutions in the future. At the minimum, BABA's 2021 report does tell us that there is still 270M shares authorised but unissued for their share reward program (which lasts til 2024, but the trend does not indicate that share rewards will stop being the preferred employee payment method going forward). With an authorised 15B buyback, you can assume that could be ~100-120M shares not diluted. It would be safe to assume at least 150-170M additional share dilution in his final share count if we then assume that share buybacks would offset stock compensation after that point, although even this could be an optimistic assumption. Not that it matters tho, there's still a pretty big margin of safety for BABA.
@@crosscy9387 As an investor I just hate these share based compensation programs. They are so expensive for companies. Then we have companies that pay almost no dividends at all but buy back shares instead and still perhaps barely only manage to offset dilution. If cash flow models were honest, those companies would be worthless.
Nice video. I'm long baba it's so cheap. I'm also long other china adrs they are cheap dirt cheap and I think they will rebound eventually , China economy has some problems but it will rebound I have shares in baba , bidu , tctzf, huya , tme. Lu, kc, vips. qd, kweb , mchi.
Last year, your target price to 2030 was 1000dolar (when stock was 270)...now the target price is arround 500dolar (when stock is 120). That is the problem with the short term analysts...a business don't change so much from one year to another...in the next 2 years we Will Change again the target to 1000...
I hope I do increase the price target next year. But the future of this stock is more uncertain then last review, for example the failed Ant IPO. Was significant value banned by the CCP.
Carlos, Cameron's price target is just that, a target. Doesn't mean much to reality. Will (or when) BABA go back to 270? I don't know. Nobody knows.
Put the numbers into a set of model and call it a target does not reflect reality. If the model's calculation swing wildly between 500 to 1000, what does it mean? Nothing.
Babas business has changed in the last year due to vines government regulations m. Their margins will take a descent hit. They'll still be well profitable I'm sure but they are not what they were 1 year ago.
Hey Cameron, would love to see Tencent!
Hey, i did realy like your settup :) Do u sheer the excel sheet? I am invested in Baba.
I don't quite understand how expected IRR is in the 25% area when it was 22% when the stock was trading at more than double the price ($270 vs $123). If all the assumptions are the same and the end multiple is the same then surely your expected IRR should be much higher.
What am I missing here?
Great content!
Hello, thanks for the content. I got a couple of questions that I hope you could clear. What about NWC investment for FCFE valuation ?? why didn't you substract that?? Also what about the discount rate you have used for your valuation ??
CFO has already covered NWC, no need to further adjustment. Unless u use Net income rather than CFO
@@adityadharmawan9001 true
Hey Cameron long time fan, this video doesn’t get into the more nuanced details about Baba. I highly recommend taking a look at Capital Mindset’s take. One of them bought Baba and Tencent pretty much at the bottom but didn’t buy for the fundamentals because as they laid out, they structurally are not connected. (You did brush over this, I’m just saying they go into crazy detail with court cases and more detail about the laws.) Despite one of them owning this, they are probably one of the most bearish but for very well thought out reasons. They lay out the risk completely different. For example they say delisting is not the risk, at least from chinas end and even then it’s not a big risk. The risk is more than that surface level thought.
Yeah its just an entitiy in the cayman island, you DO NOT own these earnings.
Anyone know about Baidu's international growth outside of china being the predominant user?
was waiting for this one!
So you say no need to subscribe but want same amount when we’ll do the work?
Should use MIRR over IRR. Using IRR inflates your return
Hi, how are you adjusting back for huge stock compensation that is currently being added back to the FCF? Eventually, it will lead to share holder dilution right?
The FCFE/shr picks up the dilution
@@CstewartCFA But I don't see any adjustments to number of diluted shares. It's 2.7 M from what I gathered. Sorry, I'm still unable to understand how the stock compensation will affect the outstanding shares. Shouldn't it increase?.
Dear Cameron.
Where did you take that 625 billion usd Last enterprise value from? I am not sure its correct. On all financial websites its around 304 bil usd, at the moment, after the massive decline in price. Is it in CNY and than the EBITDA is in usd? (leading to an expensive multiple at the moment)
How is it possible for the enterprise value to be larger in the LTM after the massive price dump than in previous years? LOL
In my opinion there is some sort of error there, and the current Enterprise Value/EBITDA = 12.5x
Thank you for the clarification.
It is from the time of annual reporting. He comments on that.
Accent came out at 18:47
Secret Brit
We missed you, Cam!
I can't remember the last time I clicked this fast.
I think his cash flow predictions are inline for 2025, we probably won’t see those multiples however. We are also seeing a higher cap ex this year.
What do you think of Brilliant Earth?
I’m going to need some popcorn for this one….
The thing is with the BABA stock just using CAPM, this business only requires a 6% return, of course there is higher non quantifiable risk from the CCP, but BABAs ROE of around 14% means that the risk of the company would have to more than double to make our return on equity not worth the risk. Taking into account the CAPM and the non quantifiable risk we should be atleast getting a couple % surplus on risk
Hi,
I was wondering why is the market Cap for BABA is $622 Billion? I thought it was suppose to be around $330 Billion?
Thank you
I heard you say “if the CCP allows it” several times in the video. What do you think the risks are with this company if the CCP doesn’t “allow it”? I guess I am just wondering if there are risks specific to the Chinese government that we need to consider and, if so, how should we consider those risks? As I understand it, and I may be WAY off base here, Evergrand’s problems were related to the Chinese government changing rules on leverage. If that is correct (and again, I could be WAY wrong on that) is that something that we need to consider with BABA? I understand risks of delisting but are there other risks that come in from the Chinese government that we are maybe not aware of?
That's the problem with Cameron's methodology. There is absolutely no consideration of reality. How the market is moving. Business environment. M&A, etc.
To me, Chinese stock (with a few exceptions) is un-investable right now. The CCP is changing the rules so quickly that no one knows what's going to happen tomorrow.
For your model. Should you not be discounting your revenue assumptions by your required rate of return
I’m not looking for the NPV, I’m looking at the IRR and then judging the risk of the investment. The problem with discounting is it everybody has a different cost of capital. Doesn’t really work for a YT channel
Great analysis!
You are the best
Great video
Can you do tencent analysis ?
The next Keith Gill right here!
well, according to you, it was a buy at $270, so why not a buy at $120
People have trouble psychologically when the price is down big
masterful video
Many many thanks
I Bought 5,000 Shares today @ 112.25 (Dec 29th)..
OVERSOLD....VIE News, Etc.. JANUARY, Tax Loss Selling Over !
Hey Cameron, your take on at&t @ current prices? Thx
Just bought a small position at $71
Good stuff man 👌🏻
Has anybody here taken his course?
Thq for this video. Please make a video on Zoom
One of the best youtube channels
BABA technically looks to retest 85.... I'll look to buy in June....
Can you please look at Target ($TGT) at its current price point?
I’m almost positive you’re getting your numbers from an unreliable source because you have your market cap figures wrong because they’ve really not issued many shares since listing on the NYSE and you show massive market cap gains since then. Furthermore the price is like 40% what it was in 2020 with less shares outstanding and you show the market cap increasing…
I think in 10 year cloud businees will be making over 25%cagr in revenue and margins are better. Cloud business alone could be worth 1T
Great analysis, thank you Cameron from a fellow 300hours ;)
The big question is whether we can apply standard DCF to a company operating in a “socialist” economy that can claim profits and board control at its will. Its a bigger question…
Disclosure: I am long Alibaba
My question too.
Imagine being the CEO of BABA: If you make too much profit the CCP will nab it, so better for your investors if you don't. Hmm ... tricky.
Would love an update on FB/Meta
Well genius.how you feeling about your pick now.
Can you please do similar videos on Tencent and Naspers