2021 Alibaba Update - 15% Price Crash Christmas Eve of BABA Stock

15% Down In A Day!!! Alibaba Update 2021
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Happy New Year everyone, I wasn’t expecting to make this video, but Christmas came a day early and Alibaba dropped over 15% on Christmas Eve.
Yes, that is right, I am happy about this price crash. But why did it happen?

Let’s get into the details with what happened and how it changes the entire investment thesis.

I based a lot of my knowledge on the great investors. Peter Lynch, Warren Buffett, Charlie Munger, Mohnish Pabrai and a handful of others.

So let's unpack this a little.
Now there probably is a bit of bullying going on by Alibaba considering they are so dominant. For example, if a supplier of dog leashes is annoyed at Alibaba’s fees, well if they leave, Alibaba won’t care at all. Where are they going to go to sell their dog leashes? They will stay with Alibaba because no one has the network effect like them. Chinese suppliers rely heavily on Alibaba and therefore Alibaba holds the power.
When you are a monopoly, well governments don’t like it.

It’s pretty much the same as Amazon in the US. Amazon has been tightening the screws on their suppliers for years.

I have no idea the extent of the issues inside of Alibaba, but it’s probably a good thing that they are going to have to open up a bit on their policies.

Do I think any of this is detrimental to the long term business of Alibaba. Very unlikely.

The stock market didn’t care about the Alphabet and facebook stories, but when pretty much the same thing happens to Alibaba, everyone freaks out.

Now Ant financial has a little more work to do with the Chinese government. They have spread into insurance, advice and other segments that do need tight regulations. It actually reminds me of what happened in Australia over the past few years in the banking sector.
Australian banks were giving financial advice that would push people into more of the bank's products, regardless of whether that was best for the customer. It was bad behaviour and it needed to be fixed.

So I am on board with this type of investigation to make sure Ant Financial is doing the right thing by the customer. It will take some time and there will be fines and changes that need to be made, I can nearly guarantee that.

But look, let’s take a breath and think about this long term.

Alibaba has a massive ecommerce lead against the competition in China.
They also still have the entire ecosystem dialled in for the Chinese consumer.

Someone buys a kettle from TaoBao, and they pay with Alipay. The seller buys more inventory from 1688.com and makes the purchase with Alipay again. The seller can list on Aliexpress to ship worldwide, and the seller can get financing through Ant Financial.

Something that a lot of people were very quick to dismiss was the unbelievable success of “Singles Day” which is Alibaba’s equivalent of Amazon Prime Day.