Barron’s recently published an article that hit Alibaba Group Holding Ltd (NYSE:BABA) under the belt. The company’s shares have been on a downward trend following the prediction.
The article that was published on September 14 claimed that Alibaba might lose an extra 50% of its share value after the recent 34% decline in trading volume.. According to the financial post, there are numerous reasons why Alibaba shares are likely to take a dip. First, there is a lot of negative influence from China’s slowed economy. Alibaba also has a lot of competition from other e-commerce giants and upcoming ecommerce platforms. The other reason that the firm gave is the company’s culture and governance.
Alibaba was not happy about the news well. The company’s spokesperson Bob Christie was quick to point out that the article had some inaccurate details as well as an unfair choice of information. He further added that the reporter wrote some misleading assumptions.
The author of the Barron’s article is known as Jonathan Laing. Alibaba Group Holding Ltd (NYSE:BABA) also defended itself against Mr. Liang’s claim that competitors were encroaching on its market share. The company also feels that it was unfair for Mr. Liang to compare Alibaba’s valuation to eBay Inc (NASDAQ:EBAY) especially because the Chinese market operates differently, and eBay does not have its operations there.
Mr. Christie has already sent a letter of complaint to Mr. Laing. As for the company’s performance, Alibaba’s market value currently stands at about $160 billion based on the recent share price. Analysts estimate that the Alibaba stock is trading at about 25 times the regular earnings. Barron’s on the other hand claims that he estimate should lie close to the 15 times multiple of eBay.
The letter that Alibaba sent stated that the comparison would be more appropriate if it compared to its fellow Chinese companies rather than comparing it to eBay. It should be interesting to see how events unfold over the week, especially on Alibaba’s share performance. Investors have a tendency to respond quickly to information, and that has a significant influence on the stock movement.