When Alibaba ((NYSE:(BA))(BA)) fell to $220 late last month, it gave value investors a chance to pick up the internet retailing giant of China. Risks of delisting in the U.S. are almost non-existent now. Thanks to a new government party in the White House, (BA)(BA) does not have as many U.S./China trade war risks.
The harsh clampdown on Alibaba’s Ant Financial is a headwind. This could limit the stock’s upside, as Ant concedes to the Chinese government’s regulations. Alibaba will have to scale back its growth ambitions, too.
The Chinese government is scrutinizing Alibaba’s role as a monopoly in the region. If it finds any proof of that behavior, Alibaba faces harsh restrictions. It could pay a fine or may need to lessen its aggressive marketing practices. This would slow the growth of its e-commerce business.
Alibaba’s cloud computing business will probably continue to thrive. China has many companies offering such services. In the EV space, Alibaba’s EV tie-up with SAIC may bear fruit. It will not enjoy the same valuations as Nio (NYSE:NIO) or Xpeng. For shareholders, that will not matter.
Expanding outside of e-commerce and into the hot EV market is a worthwhile venture.