over 2 years ago • 2 mins
A long-term investment in Alibaba (ticker: BABA) with a $360 price target by 2023
Alibaba is China's biggest retail and wholesale ecommerce company. In addition, its cloud computing, digital media, and digital entertainment businesses are expanding rapidly.
I believe the shares could reach about $360 by 2023, 73% above the current price. The company's revenue and earnings have consistently been rising, while its P/E multiple has fallen.
The biggest risk associated with Alibaba is the Variable Interest Entity (VIE) structure by which it – and other Chinese companies – are listed in the US. China has never clarified its position on these VIE structures, which mean that Western investors don’t technically own any part of the Chinese firm. But considering that Chinese companies have raised billions of dollars in the US through these arrangements – bringing incredible wealth and status to the Chinese economy and tech sector – I find it very unlikely the Chinese government would undermine the arrangement.
The other major consideration is the ongoing China-US tensions over trade, geopolitics, and intellectual property. While it remains to be seen how these superpowers will resolve these serious disagreements, both countries are dependent on one another for their economic prosperity.
Do you agree with Malake that Alibaba is “on sale”? Drop us your thoughts here.
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