During the 2nd half of 2020, BABA experienced dramatic events: 1) the withdrawal of 35B Ant Group IPO imposed by regulators (November) and 2) the ongoing investigation over potential anti-competitive practices (December). Both events were triggered by the clash between Ma and the Chinese communist party. Those events pushed the price down to levels equal to those of late 2019 / beg 2020.
In the meantime, BABA posted strong fundamental growth over 2020. Such trend is expected to continue over 2021.
The high volume observed around Jan’21, indicates strong institutional buying – which might help sustain the price at those levels in case of market stress (as observed during the latest market shake-off).
Overall, I believe this is a good entry opportunity while keeping an eye on the down-side as a result of the outcome of the ongoing investigations as well as the relationship between Jack Ma and the Chinese communist party (the latter being highly correlated with the former). Overall, I am bullish on BABA for the medium-term.
Some stats: - 3 Year EPS Growth Rate: 26% - 3-Year Sales Growth Rate: 37% - Annual Pre -Tax Margin: 31.6% - EPS Est % Chg (Current Yr): 38%