Together, those made up roughly 59% of the market cap. The company spent $1.8 billion repurchasing stock, an arguably modest amount given the extent of the undervaluation and solid free cash flow generation, but still impressive considering that share repurchases are still a newer development for this company.īABA ended the quarter with $63.4 billion in net cash plus $66 billion in additional equity investments. This marks the company’s return to a double-digit adjusted EBITDA margin after it dipped to 8% last year.īABA was able to generate such strong growth in adjusted EBITA largely due to its cost reduction initiatives, as it was able to reduce losses substantially at almost every loss-generating unit, as well as boost margins by 500 bps in the core commerce operations.īABA generated $4.7 billion in free cash flow in the quarter, making up 124% of adjusted EBITA. The big story was clearly the boost in profitability, as adjusted EBITA grew 60% YOY. In its most recent quarter, BABA saw strong growth in most of its various business categories, but overall revenue growth hovered at 2% YOY as its most critical commerce operations declined 3% YOY. The stock has not gone up as expected, as Wall Street has suddenly lost interest in these events that in theory should help realize considerable shareholder value. I last covered BABA in May, where I discussed the potential upside from the proposed spinoffs. The adjustment has been even more severe at BABA as it is still trading at the same levels as it did in 2014 when it came public. The valuation reset in the tech sector has led many tech stocks to trade at pre-pandemic levels. While risks have not declined for this name, I am increasing my aggression in buying the stock and have made it a core position in my portfolio. At this point, any successful execution on spinning out the various business units, starting with its cloud division, is likely to lead to substantial upside - downside scenarios seem to focus on management being unable to accomplish those goals. This is a company which has net cash and investments equivalent to nearly 60% of the market cap, and trades at around 10x earnings even before accounting for that fact. BABA has seen its valuation reset to arguably distressed levels amidst the rising interest rate environment, and management continues to work towards spinning off various business units in order to address the conglomerate discount. But the market seems to be ignoring the clear signals being sent from management that they are focused on extracting shareholder value. And I wouldn’t want lead-acids, since I’d need to fill the trunk and the rear luggage well completely just to get, what, maybe 50 miles of range? No, a lithium-ion pack from a wrecked Leaf or something would be way better.The bearish thesis against Alibaba ( NYSE: BABA) is well known at this point, centering around the regulatory risk in the event of rising US-China tensions. So that would be another significant expense. I was going to pull it and see if I could get it turning again or maybe crack it open and try my hand at rebuilding it, but let’s be real: I don’t have that kind of time right now! And I don’t have a ton of cash to just throw at it! But! What if I pulled that engine and tried out one of these cheap EV conversion kits?įrom what I can tell, this would be a reversible conversion, if I don’t do anything stupid, so if I wanted to slowly rebuild the flat-four, I could, and then swap it back.Īnd, sure, 20 electric horsepower would be a power downgrade of about a third, which isn’t ideal, but, hey, no gas to buy! No valves to adjust! No fumes! No heat in the winter!Īlso, it’s not clear if these conversion kits include batteries I suspect they don’t.
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