Ali's Stock Price Falls Sharply. Who Is Behind It?

Before listing in September 2014, Alibaba was regarded as a hot topic.

The company comes from the fastest growing and largest consumer market in the world.

On the first day of the listing of Ali, its share price rose 38%, and its market value exceeded 241 billion dollars, far exceeding Facebook's 194 billion 300 million dollars at that time.

Today, the company's share price is down 23% compared with the first day's closing, down 39% from its closing price of $119.15 in November 10th.

After the disappointing earnings report in the latest quarter, the stock fell to $71.03, setting a new low.

In fairness, Ali's growth rate is not bad.

According to the financial report, Alibaba's first quarter revenue was RMB 20 billion 245 million yuan (US $3 billion 265 million), an increase of 28% over the same period last year.

Net profit was RMB 30 billion 816 million yuan (US $4 billion 970 million), an increase of 148% over the same period last year of RMB 12 billion 438 million yuan.

Not in accordance with GAAP, net profit was 9 billion 496 million yuan (US $1 billion 532 million), an increase of 30% over the same period last year.

Nevertheless, Ali's first quarter results show that its revenue is still not as good as expected. Market analysts have forecast that Ali's first quarter revenue will reach $3 billion 390 million.

At the same time, Ali's quarterly sales growth rate was the slowest in three years, and the total volume of online pactions was also lower than market expectations.

I believe that the performance of Ali is not as expected as one of the reasons for its stock price decline, but it is more than a deeper analysis.

First, global expansion is hindered.

Since listing, Ali has been actively implementing global expansion plan.

This summer, executives have been looking for potential business opportunities everywhere in the United States, attracting companies to sell their products on their web sites, while companies are also trying to expand to the United States.

But it has encountered resistance in other countries and regions.

In May this year, the company was ordered to close the Taobao Taiwan website and was fined for failing to obtain local business license.

This incident undoubtedly cast a shadow over Ali's overseas expansion.

Second, most of Ali's income comes from Chinese consumers.

In the last quarter, business came from China.

The revenue was $2 billion 100 million, accounting for 75% of total revenue.

Ali said that because of the slowdown in China's economic growth, its revenues and profits may be "greatly adversely affected".

American investors worry that Ali's performance is too dependent on China's economic growth, and this strong growth momentum is unsustainable.

At the same time, in the Chinese economy, Ali's business belongs to a fast developing new industry, which means that the regulatory rules of the industry may change at any time.

Just a few months before the listing, the people's Bank of China announced that it would restrict the paction volume of consumers in smart phone payment services, which could affect Alipay, Ali's mobile payment company.

Alibaba has warned in the prospectus that if Alipay services are restricted, it may damage the business of the company.

Again, the renminbi has recently depreciated, and American investors are increasingly worried about China's economy. Many stocks like Intel and apple, which are closely related to China, are selling.

However, the impact of these American companies is far less than that of Ali. After all, Intel and apple have a larger share of other markets in the world.

Finally, in March this year, China's regulatory authorities put forward stricter regulatory requirements for domestic electricity suppliers.

Its website, especially Taobao, has been accused of selling large quantities of counterfeit goods.

Analysts said at the time, as Alibaba continued to step up efforts to crack down on counterfeit goods, the company's profit margins and total commodity pactions would be affected.

Ali's earnings report showed a slowdown in total merchandise trade growth.

The challenges that Alibaba is facing now is that we hope it can be solved, and then play its role in the later life and lead more enterprises to develop.