Rise and fall of Alibaba: what next the cliff?

(Bloomberg) - Alibaba Group Holding seemed infallible one year ago, when it debuted in the US Stock Exchange, the largest IPO ever made. She had full control over the Chinese e-commerce, the economy was growing and consumption increased steadily. Shares rose 76% over the opening price on the stock market in just two months.

Then it all collapsed. The Alibaba came under fire from a government agency, reached agreements that disconcerted investors and changed president when growth slowed. More importantly, China's economy has become unstable, which compromised the increased consumption that depends on Alibaba. Stocks fell, fell and fell, came to the opening price, and dropped further. The infallible failed.

And now? Investors who saw US $ 128 billion in market value disappear until Wednesday should not expect relief anytime soon. James Cordwell, Atlantic Equities, the highest-ranked analyst among those who monitor the action, projects that the slowdown of the Chinese economy will weaken the growth of e-commerce transactions until at least 2016. The various agreements that Alibaba negotiated will also take to bear fruit.

"All operating metrics seem to be pointing the wrong way," Cordwell said in London. He ranked first in the Bloomberg Absolute Return rankings for their projections on Alibaba and the recommendations he made about the stock portfolio monitoring. "While investors do not feel that this downturn has come to an end, it will be difficult for the action."

Confidence
The company based in Hangzhou are trying to go beyond China and e-commerce and announced $ 15 billion in transactions. Many of the investments has an obvious strategic sense, but others are more difficult to understand, such as participation in a Guangzhou football team in a minor player of Chinese smartphones and a nonprofit entertainment studio.

But the chairman and a founder of Alibaba, Jack Ma, and its partners have a vision of how all this will fit in the next ten years. The goal is for Alibaba to expand beyond trade and go for content, such as movies and sports, that provides payment systems for their own transactions and for others, and who can make their technologies are widely used as the operating system produced internally and in the cloud computing service.

In addition to disputes with China by counterfeits, the company had to deal with media criticism. The magazine "Barron's" projected this month that the action will come crashing down over 50%. Alibaba said the report was based on incorrect calculations, it contains factual errors and used the information selectively.

John Choi, an analyst at Daiwa Capital Markets, said that despite the negative coverage and unfavorable economy, the fundamentals of Alibaba remain positive and e-commerce is still growing.

"At this point, it all comes down to trust, and confidence in China is negative too far," said Choi, who recommends buying action. "E-commerce is one of the very few that continue to offer vertical adequate growth in the internet sector in general."

Optimism among analysts
Other analysts also did not give Alibaba. Of the 52 who are accompanied by news agency Bloomberg, 44 recommend buying the share and only two recommend that investors sell.

Shareholders have not been so optimistic. Billionaires Daniel Loeb and George Soros sold everything they had in Alibaba, or largely, and the funds directed by the disciples of Julian Robertson, the so-called tiger cubs. Furthermore, the action of the low betting increased and interest in the short-term reached a record.

Cordwell, the Atlantic, which has a neutral recommendation, see a light at the end of the tunnel and believes the company will end up returning to stronger light.

"It will probably be two or three difficult quarters for the company," he said. The current challenge "is to make Alibaba a better company in the next ten years."