BABA Stock - is Alibaba's Stock a Good Investment Right Now? Alibaba Stock 2020 | Summary and Q&A

TL;DR

Alibaba's business segments include core commerce, cloud computing, digital media and entertainment, and innovation initiatives. The coronavirus has impacted their revenue and profits, but their long-term growth potential remains strong. A discounted free cash flow valuation suggests a fair value of $199 per share.

Key Insights

• 💯 Alibaba's core commerce segment is the primary revenue driver for the company, accounting for 86% of their revenue.
• 😶‍🌫️ The cloud computing segment offers a wide range of services, contributing 7% to Alibaba's revenue.
• ❓ The coronavirus has affected Alibaba's revenue and profit margins, but revenue growth is expected to continue.
• 🙃 A discounted free cash flow valuation suggests a fair value of $199 per share, indicating potential upside for investors.
• 🪐 Alibaba's positive net debt further enhances their overall value.
• 🫥 Analyst estimates forecast a continuation of revenue growth for Alibaba, although profit margins may drop due to certain business lines.
• 🥶 The perpetual growth rate assumption is a crucial factor in the discounted free cash flow valuation.

Transcript

hi I'm Jimmy in this video we're gonna look at alibaba's stock ticker symbol ba ba so we're gonna look quickly at the basics of alibaba's business and then we're gonna dive into how they're being affected by the coronavirus and then we'll use that to try to come up with a fair value for Alibaba stock using a discounted free cash flow valuation meth... Read More

Questions & Answers

Q: What are the major segments of Alibaba's business?

Alibaba's main segments are core commerce, cloud computing, digital media and entertainment, and innovation initiatives. These segments contribute to the majority of their revenue and encompass various online platforms and services.

Q: How has the coronavirus impacted Alibaba's business?

The coronavirus has led to a decrease in consumer spending in China, affecting Alibaba's revenue and profit margins. While some segments like cloud computing and digital entertainment are performing well, their profitability is not as high as other segments like Tmall and Taobao.

Q: How is Alibaba's stock valued?

The video uses a discounted free cash flow valuation method to determine Alibaba's fair value. After considering analyst estimates, a required rate of return, and a perpetual growth rate, the fair value is estimated to be $199 per share.

Q: What is the current debt situation of Alibaba?

Alibaba has a positive net debt, meaning they have more cash than debt. They have approximately $20 billion in debt and $77 billion in cash, which positively impacts their overall value.

Summary & Key Takeaways

• Alibaba's core commerce segment, including Alibaba.com, 1688.com, Taobao.com, and Tmall.com, accounts for 86% of their revenue.

• Their cloud computing segment provides various services such as data storage and analytics, while digital media and entertainment include platforms like Alibaba Pictures and Yuku.

• Innovation initiatives consist of apps like Amap and DingTalk. The coronavirus has affected Alibaba's revenue and profit margins, but their overall growth trend remains positive.