Oh, my goodness, we have some incredible news coming out from china of all places. It seems that the chinese government just announced a 2.8 billion dollar fine and a three-year probation against alibaba. Now that shouldn't come as a huge shock to you, because if you remember which you should back in december, we first heard about an investigation against alibaba for allegedly violating various chinese antitrust rules. Now i was as shocked as you to find out that china has anti-trust rules, but it's a whole different matter now check this out jack ma.

Although a lot of people still think that he's heavily involved with this company he's actually not he's been away for a long time for a couple years, he's not even involved in the day-to-day management of the company. However, this company is really identifiable with his name and himself so when he came out and basically criticized the chinese government for over regulating the industry immediately after we heard about the investigation, the chinese government pretty much decided to be the scorpion in this following story. If you remember that's kind of the story that i always tell the frog and the scorpion right, so the scorpion comes up to the frog and says: hey. Take me to the other side of the river.

I can't swim and the frog says hell: no, i'm not about to take you. You're gon na bite me we're. Both gon na die no way jose and essentially then the scorpion basically says a logical thing. He says why would i bite you if i bite you we're both gon na drown and die, doesn't make any sense so reluctantly the frog agrees and as they're swimming through the current all of a sudden, the frog feels a sting and he realizes he just got Bitten by the scorpion - and he looks at the scorpion says why the hell did you just bite me now we're both gon na die.

What did you do, and the scorpion looks at him says, couldn't help myself and the thing about the chinese government that makes them the scorpion in the story is quite simple. The chinese government is essentially more scared of losing control than actually losing the war against the us and the entire western world. Of course, they want to win, but much more than that they're much more scared of losing control. When somebody gets too big, when somebody allows themselves to speak freely, that is much more scarier to the chinese government than losing the economical battle.

Quite simple, so in this case they just couldn't help themselves. However, let's put things in proportion. I know that 2.8 billion sounds like a lot of money and, of course it's unpleasant, but you got to understand who you're dealing here with right: 2.8 billion for alibaba is a parking ticket. It's a spitting ticket.

It's a slap on the wrist. It's nothing! Let me explain why alibaba generated almost 100 billion dollars of revenues last year now they generate 25 billion dollars of net operating profit. So this whole thing is probably around 10 of the net operating profit. It's about point 17 of the entire assets and plus they're sitting on the pile of cash from what i'm looking here right now, they're sitting on 50 billion dollars worth of cash.

So this is really nothing, it's not a huge deal, but will it negatively affect alibaba beyond just the cash amount which is not significant? Yes, let me explain why. The thing you need to understand here is that this thing is only the beginning. This is just the announcement that the battle is starting now. Alibaba will definitely have to face with a lot of consequences, which we still haven't heard about.

Of course, the ant ipo is not going to go through they're, probably going to restructure the whole thing, basically carving out alibaba and and pretty much restructuring it. So it doesn't get too big because they can't handle that. Of course, that's going to hurt alibaba, and the thing you have to remember here, is that anti-trust authorities, even in china, actually have a lot of impact after the fact. Imagine that this thing just came out what happens next well now, alibaba is in the doghouse for the next three years, at least for the duration of the operation.

Now, in those three years, their competitors have so much leverage they're pretty much holding them by the nuts. Every time alibaba does something that the competitors don't like they just skittle down to the entertaining offices in shanghai or whatever it is and basically say, hey alibaba is not playing fair. Alibaba is not going to compete as hard. The competitors know that they can go crazy, plus there's going to be structural and actual operational guidelines to prevent alibaba from doing these practices today, essentially, opening up things for more competition.

So beyond the fine which i don't think is significant, the actual structural stuff, basically carving out ant, which i think will happen and essentially hindering the competitive nature of alibaba and letting the competitors breathe, actually gets the chinese what they want, which is more control and nobody Who's bigger than the government, however, for alibaba, it's not such good news, and it's partially one of the reasons i don't like to invest in chinese companies and a lot of you may say well tom, every time, there's a scandal that has anything to do with alibaba, Which happens quite often, the share price goes to 220 and then it bounces back up and it might. And if i was a swing trader i might care, but as a long-term value investor, i'm not interested in putting my money where the political environment is so volatile and unforgiving. I'm not gon na do it. You can do whatever you want, because this is just my opinion might be.

Inaccurate might be wrong, might be the ramblings of a madman. Who knows you got ta? Do your own research find out for yourself, allegedly blah blah mother effing blah before we sign out a huge shout out to our patreons and channel members? We just completed a 30 upside for fortinet. If you remember in february, i came out and said: hey fortinet is gon na do 30 and will go to 195 and now 60 days later. The share price is at 197.

Now it means that the share price went over my target price by two dollars and, as you know, my methodology is that every time my target price gets hit, i reevaluate whether i want to raise the target price or liquidate my holdings and in the case of Fortinet, i am liquidating all my holdings, i'm getting out, i'm selling everything at 197 and i'm out of fortnite. I wanted to share this with you, so you know that i'm being completely transparent, i'm out of fortnite at this price, i'm out, i'm gon na take 30 profits, sayonara now, as always a huge thanks to the channel members and the patrons for making this happen. Congratulations if you invested in fortnite, we have a lot more interesting stuff going on on patreon, go check it out. It's five bucks per month and you'll be supporting the channel.

Thank you. So much we'll see you in the next video.