Alibaba Stock Worth 20% MORE on Six-Way Split

Alibaba stock analysis following the big split news! I’ll show you why shares of BABA should be at least 20% higher! ???? FREE newsletter with market updates, trends and news! https://mystockmarketbasics.com/dailybowtie

HUGE news from Alibaba today that the company will be splitting up into six independent companies! We’ve been looking a lot at spinoffs lately, we’ve seen that these typically outperform the market by as much as 30% over the first year so I want to do a quick valuation for shares of Alibaba, show you why I already own the stock and why my price target just went up 20% on the news.

Alibaba reports seven business segments in its financials; China ecommerce, international ecommerce, Food delivery what it calls Local consumer services, its Cainiao Logistics unit, Cloud services, Digital media and then Innovation Initiatives. Each of these segments will continue to operate under the parent company but seek an IPO of shares when possible. Only the Chinese ecommerce and cloud segments are profitable right now though I think international ecommerce, logistics and digital media will be profitable within the next year and could seek an IPO quickly as well.

What I want to do for this Alibaba valuation is what’s called a sum of parts valuation, breaking the company into those six segments and comparing current revenue, growth and valuation against similar stocks. With that, we can add up the stand-alone valuations to see how it compares with the current valuation of Alibaba.

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
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