Alibaba Update: Whoops! Is This Stock Really A Value Trap?

Alibaba Update: Whoops! Is This Stock Really A Value Trap?

On November 7, I posted a column about Alibaba that now looks like a really bad call. I made the case that Alibaba – the Chinese internet and technology giant – was a screaming value play. In other words, I argued that it was significantly and artificially undervalued. The share price had fallen by about 50% in the previous 12 months – mainly, I thought, as a consequence of Beijing's cancellation of the Ant Group's Initial Public Offering (Ant was a spinoff from Alibaba), and the subsequent quasi-disappearance from public view of Alibaba's visionary founder, Jack Ma – as well as a general campaign of regulatory pressure focused on the Chinese Tech Sector. I called attention to the upwards-pointing twitchiness of the shares in response to several sightings of Ma – especially the Jan 20 video that provided proof that he was alive, and the reports in September and October that seemed to indicate he was at liberty, and could even leave China for a "vacation" in Spain. I interpreted this sensitivity in the Alibaba shares as an indication that as Jack Ma undergoes a step-by-step rehabilitation, the stock could see a strong recovery. [Full disclosure: The case looked so