So what in the world is going on with alibaba? In case you haven't heard about this company, which i highly doubt, if you watch my channel, the ticker is baba baba and this is probably one of the better fundamentals based companies out of china, probably in the entire world. If you look at the actual numbers, it's a really good company, great fundamentals, and yet it's trending so down. It can actually give my grandpa competition after his 157th shot of vodka. The way he goes down to the floor, i mean this company is a good competitor but jokes aside, not every day you see a company with such sound fundamentals, trending so low and there's a reason for that.

Now i'm not going to make this video about china about my own personal opinions. I want to give you the tools to decide for yourself, because this is an intriguing situation, so i'm going to lay it out for you fundamentals, value risks, so you can make a decision for yourself if this is a good investment for you or not. Now, as you know, i personally do not invest in chinese companies and i will not be investing in alibaba, but that doesn't mean you shouldn't, or should i mean it's your own decision, i'm just a guy on the internet with an opinion which might be inaccurate might Be wrong might be the complete reminders of a madman. You got ta, do in research, allegedly blah blah mother effing blah.

Now in this video, i'm gon na go over the fundamentals with you, but before we do, let me first explain a few things about this company. Now, most of you think about alibaba as an e-commerce play, which it's not exactly, that's not the only thing they do. It's like saying that amazon only does e-commerce that will be completely ignoring the aws business and a lot of other stuff amazon are doing like digital communications and whatnot. Alibaba is very similar.

They do a lot of logistics. A lot of e-commerce but they're also very active in cloud computing in digital media and in healthcare. So it's not just an e-commerce company they're. Definitely a technological company, much like amazon for the purpose of our comparison.

Now, there's a lot of difference between them and amazon, but the one thing you need to understand is that there's a lot of risk involved with this company which i'm going to break down in this video, but that's not going to be a china bashing video. It's not going to be me, saying: well, don't invest or do invest. I just want to show you the numbers, because what i want you to understand is that, despite what we're saying here on youtube, despite other people, every single company on this god-given earth has the potential to go either to the sky or to zero. Ask the people who invested in enron back in the day i mean andron used to be the biggest company in the world.

People would say: well, there's no way enron is going to go to zero. There's no way the titanic can round. Every single company, including tesla, through palantir, including microsoft, including amazon, including every single company on this planet, has the potential to completely implode and go to xero, and i think understanding these risks and actually getting acquainted with them and getting comfortable with the risks you're managing will Make you a better investor now, here's the thing about alibaba alibaba is probably not your typical e-commerce company. The way you think about it, alibaba is very similar to amazon.

In that respect, they do a lot of other stuff they're in cloud computing, they're in healthcare, digital communications, logistics. They do a lot of stuff, so it's not an e-commerce company, but it's a really true technological company. The thing is that if you look at their current valuation, they're - probably trading to about one-third of where they should be based on their fundamentals, that's a whole lot of discount question is: do they deserve the discount or not? And that's the question i'm going to answer in this video i'm going to show the fundamentals, i'm going to share the risks and then you can decide for yourself. There's not going to be me bashing this company or china and saying my own personal opinions.

That's not about that. I want to show you a great company that has significant risks, so you can decide if you want to invest or not now. The main thing i want you to understand here is that there's definitely a lot of panic selling around this company have no doubt about it. Now.

A lot of the stuff that happened in china has nothing to do with this company. I'll. Give you that now the education ban has nothing to do with alibaba. The tencent issue has nothing to do with alibaba dd had nothing to do with alibaba.

We can go through the entire list. The only thing that alibaba was really on the hook for is the anti-trust case, which is already done. They paid it. It wasn't a huge amount for them.

I think it was like 3 billion and it's gone so there's not any pending issues between alibaba and the chinese government. However, having said that, you need to understand that this company is trading at one third of where it should be based on the fundamentals. For a reason, the reason is that it's operating in a very high risk regulatory environment. And when i say regulatory i don't mean antitrust and i don't mean financial regulatory.

I mean chinese regulatory and when you understand communism and how communists think you have to understand the risks involved, there's one thing: communists do not like to give up is control, rank and power and they definitely don't appreciate a commoner becoming a king. Now, that's exactly what happened with jack ma. This is a guy that came from nothing. He was a school teacher.

I think he was teaching english and then he became a billionaire, probably as strong as some of the highest ranking chinese politicians. They don't appreciate that the way the communism works is that you have the elite, the politicians that are basically the rich ones, the powerful ones and there's the rest they're all dirt poor. They should not have a say anything and when you have somebody climbing out of the hole and basically saying well, i'm as strong as you i'm as big as you i'm as powerful as you, they don't appreciate it and they have to eliminate that and as a Russian, i think i can analyze this issue beyond the western logic. Now, not that i'm saying that western logic is worse than russian logic or chinese logic, it's just it's different and here's a quick explanation of what exactly is going on here.

In case you haven't seen it there's a new movie coming out with ryan reynolds where he plays an npc, a non-participating character. He doesn't know he's in the video game now only when he puts out the glasses, the special glasses he actually sees. What's really going on and it is a video game now here's the thing this is exactly what's going on with china, but as long as you have western logic, you can't understand. What's really the story here because you're looking at it and you're saying well, why would they do it? Why would they screw with alibaba from an economical point from a logical point? It makes no sense, it's not going to help them in any way shape or form.

So they're probably not going to do it and that's the main problem. You need to look at it from a non-western logic, from a communist logic, kind of logic that i can think in which is a good russian logic. And when i look at the situation, i understand one thing: communists, love control and they cannot allow anybody to climb from the that is the rest of society and be equal to them. The politicians are the elite they're, the rich they're, the powerful and everybody else is just peasants and when you have a school teacher like jack, ma clamming out from the and basically saying well, i'm your equal, i'm as powerful, i'm a strong.

I have all this money. I can do whatever the hell i want, they won't have it and it's not just about jack ma or anybody else. It's not even about a single company, it's about having companies or individuals that are that strong, like, for example, in the u.s amazon, google, facebook, microsoft, extremely strong, elon, musk, extremely strong. Their money allows them that influence that power.

They won't have any china they'll sacrifice the economy, but they won't have it, because the control is the main thing that they're fighting for and that's the thing you need to understand now. That does not necessarily mean that anything bad is going on with alibaba. That also doesn't mean that it's a bad investment you might make a lot of money from alibaba. All i'm saying is that if you're doing this, you need to understand, what's the real risk here to evaluate it, and then you can make a decision, maybe you say: well, listen tom! This is one third of the price.

With all this cheapness, i mean i can live with this risk and i'll be fine with you for me personally, that's not enough, but for you it might be because looking at the fundamentals, they're way more than impressive impressive is an understatement check this out. So, as you can see on the screen right now, this is a 432 billion dollar company 2.37 short interest, which means almost nobody in his right mind is shorting the company at this price 160 dollars. It's not a good short. We can agree to it.

If you look at the momentum for the last six months, they lost almost 33 over the last year, they lost 44. This company is going down, even though their numbers are way more than phenomenal. Now i want you to look at this. These are the multiples.

I've said it before and i'll say it again: this company is so undervalued, it's not even funny. Their p e is 19.. Look at this amazon p. Look at this 58.3, it's literally one-third of the price of amazon.

Now, look at this eve.17 look at the evita of amazon 29.16. It's almost like this company is begging to be purchased. I mean i'm not going to do it, but it definitely is cheap. If you look at amazon, you look at alibaba i'll, show you why they should be priced in a comparable range and yet they're.

Not the only reason is those risks i told you about, but this is your decision. Let me show you some cool stuff, so this is the actual momentum for the past year, as you can see here, they're just in the red in every single category 44. In the last year. That's half your value, half eddie! I won't have half the value of a couple hundred billions dollars of business.

That's actually doing great loss over panic over fear over risks. You can decide for yourself, but that's a major discount. Now i'm definitely tempted i'm not gon na lie, but i'm not gon na put my money in a country where this money can literally evaporate within a night. I'm also not that excited about buying contractual rights instead of actual property, but that's a whole different thing.

You can make up your own mind. Let me show you some stuff look. This company grew last year by 40. It's still anticipated to give the same amount of growth next year.

This is a company, that's growing like crazy. It's a growth company with a couple hundred billions in valuation. It's definitely not going away anytime soon. If ever i mean look at their margins.

40 gross profit, 13.7, ebit, 20, ebitda, 20 ebitda. Look at amazon amazon is at 40 very similar, look even the margin. 13.4. 13.4 versus 20, their ebitda margin is way better than amazon amazon, i'm not even kidding.

Look. These numbers are phenomenal. This is monopoly money and look at their growth. I mean they just started with 8 billion in 2014.

Look at this they're at 120. Just seven years later, look at the growth here: 39 56 71. That has nothing to do with the pandemic. This company is going ballistic, now look at their balance sheet.

This is just obscene 75 billion in cash, 75 billion look at their assets, total assets. 265.. If you eliminate goodwill, it's 220 billion in assets now look at the total abilities 93.. This is an obscenely good ratio.

Now look at the total debt here. Total debt, i believe, is 26 28 28 billion net debt is 46.8, meaning they have more cash. 50 billion. More cash than the entire debt they have on their books.

I mean this is nothing short of phenomenal. Look at this current now this is a company, that's giving you 170 billion per year, it's growing at 40 per year, it's profitable. The margins are insane and it's trading at 400 billion when the revenue per year is 170.. That's just ridiculous, but hey you have to understand that there's no freebies in this world, the company is definitely priced lower than it should be significantly.

But here's the thing when i look at panic selling, i try to look at it for a longer view. This hasn't been panic selling for a year. Panic selling can be a few days, maybe a few weeks, but a whole year of panic selling. I don't think so.

I think a lot of people share my view that the risks are too great to get into china right now. This is a personal decision. This might be a really good deal if you weather the storm, i mean alibaba is legitimately worth about. 300, maybe even more if the chinese government just decides to chillax and just let it go, it's going to go up, there's no questions about and then you'll make a lot of money i personally am staying out, but hey you shouldn't just base your decision on what I'm saying: do the research look at the financials look at the risks? Do some research about vies and the offshore structure do some research about the chinese government and the regulation and you'll find out that this is a very tough case? Alibaba is definitely tempting, because this is borderline insane, not to invest in it, but yet for me, the risks are just too great.

I feel that this legitimately has a risk of going to zero because, unlike the us or the uk, the chinese government can literally wake up one day and say well, no more alibaba like they did to diddy, and that kind of thing just scares me hey. You might make a lot of money and i honestly hope that you do by the way, if you want to join our patreon community five bucks per month and you'll be supporting the channel. I really appreciate it. Thank you for the channel members, the patrons we have a zoom call on monday.

2 p.m. Jump in. If you join before that. Otherwise i'll see you on the thursday call, which is at 7am hope you join by that and if not it's all good i'll, see you in the next free video shout out to everybody.

I've been tom. You've been you i'll, see you tomorrow.