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China’s Alibaba: Cheaper Than Amazon And Beating Wall Street’s Expectations

Billionaire Jack Ma is no longer involved in the day-to-day operations of his e-commerce giant Alibaba (BABA), but that doesn’t mean it’s going down the tubes. Not only is Alibaba trading at around two times less than Amazon (AMZN), it just beat consensus on earnings.

Alibaba’s shares rose over 3.25% in New York this morning thanks to some much needed good business news out of China. Long-term China investors still have a reason to be bullish.

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Alibaba vice-chairman Joe Tsai basically thanked China’s 300+ million urban middle class for buying on its platforms, a sign that despite overall weaker national retail numbers than in previous years, the China consumer is alive and kicking.

Here are some of the numbers:

Alibaba’s shares are much cheaper than Amazon, though compared to the benchmark MSCI China, the stock is still expensive. Alibaba’s trailing 12-month price-to-earnings ratio was 34.13 as of market open on Thursday.

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By comparison, Amazon trades at multiples of 73.49 as Wall Street seems willing to bet that Amazon is the last mall standing in America.

Alibaba’s China rival, Tencent, fell 2.82% in Hong Kong today after last night’s financial results disappointed.

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Brendan Ahern, CIO of KraneShares in New York, blamed the quants for the slide of Tencent’s over-the-counter shares in New York this morning. He thinks they’ll stage a comeback as active money managers start buying.

“Algorithmic trading likely played a role. The supercomputers are programmed to sell stock when they read the filing and catch words like ‘miss,’” Ahern says. “I believe portfolio managers will be active in buying this dip.”

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Meanwhile, despite some funds being underweight China tech due to valuations, Alibaba has returned over 20% to investors this year, besting the MSCI China and Nasdaq 100.

Ma’s creation is also beating Bezos’ Amazon. Amazon shares are up 12% year-to-date.

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