Is Alibaba Too Risky?
Alibaba’s (BABA) stock price along with many other China-based ADRs has fallen precipitously. The question has become: is the political risk too great to invest? An article published in the Wall Street Journal this past weekend motivated me to produce this update. I believe the fundamentals of Alibaba are excellent relative to the long-term. In contrast, short-term fundamentals have weakened primarily as a result of political risk. Therefore, I would suggest that this extremely high-quality e-commerce company has become clearly speculative. The real question is whether or not the ADRs will continue to be listed or not?
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Disclosure: Long BABA.
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