Alibaba Group Holding Limited (NYSE: BABA) stated that it would ‘thrive’ without the US if a major trade war should come into fruition

Alibaba (BABA) is a long-term favorite of mine, and has been for awhile now. So far this year the stock has been getting pushed further and further down, which in my eyes is creating a larger opportunity to buy at a discount.

YTD BABA is down ~16%. However, the stock had a nice run from late-April up until mid-June, when BABA reached its all-time high of $210. Since reaching this point, the stock has been plummeting back down to its current position of $154.

Alibaba has also expanded into the cloud market. I am very bullish on this move. The segment has been growing at 3-digit percentages for the past few quarters and is also the leader in the Chinese market. This market is expected to reach $20 billion in value by 2020 with Alibaba forecasted to own ~30% of the market (~$6.6 billion).

On top of this, Alibaba stated that it would ‘thrive’ without the US if a major trade war should come into fruition. If the trade war causes US goods to become to expensive, the company will abandon the products and outsource to other countries or product them domestically. Vice Chairman Tsai stated that they do not want to abandon the US but are prepared to.

US companies are actually embracing the Chinese company. For example, Kroger has begun selling its products on Alibaba’s Tmall site and Starbucks is using to deliver. The US government seems to see a problem with this. While it is not a US company selling the end product, there are plenty of US companies involved in the process. Alibaba is using American products on its platforms as there is a demand for those products. However, if the US government continues to fight the Chinese these products will no longer have an international platform to call home.

Alibaba is still the e-commerce leader within China. This is important to remember as this is Alibaba’s main segment. Core commerce consisted of 63% of sales as of the most recent quarterly report, equivalent to RMB 53 billion of RMB 81 billion. As of this report, Alibaba held 58% of the market in China, with second place holding 16%.

While analyst’s ratings do not matter to everyone, it is important to note that analysts overwhelming are in favor of BABA stock. 44 of 49 analysts rate a BUY on the stock, with an average target price of $230.09/ADR.

Although there is some uncertainty around valuation and forecasts, I am still buying BABA stock. P/FE is lower than the historical average at 26x, opposed to 30x. P/S is also lower sitting at 10x compared to the historical average of 17x. If the stock continues to plunge then these metrics will become even cheaper. For those who have a higher cost-basis, this current decline seems to be opportune for decreasing that and increasing your margin of error.

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