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From: Jacob Snyder8/20/2021 3:12:30 PM
1 Recommendation

Recommended By
Sun Tzu

   of 123
 
AMZN vs BABA:

1.6 0.5 market cap T$
56 19 PE gaap ttm
3.6 3.6 P/S ttm
443B$ 119B$ revenue ttm
14 3 P/B ttm
27 13 P/cash flow ttm
30% 47% revenue growth, 5Y cagr
66% 34% EPS growth, 3Y cagr
41% 40% gross margin
90 75 cash B$
123 28 total debt B$
3.0 0.9 debt/free cash flow

Everything I read about BABA, is about the China risk. I see no sector or company risk. The CCP is saying: private companies cannot operate against the national interest (as defined by the CCP). I can live with that. I do not think BABA’s business model is incompatible with the government’s goals. BABA is one of China’s golden geese, and the CCP is not going to kill those geese. Scary stories predicting China will expropriate US investors, is silly fear-mongering.

BABA’s EPS has not been increasing as fast, because BABA is investing in more growth opportunities (expansion beyond China, cloud services, finance, media). Both companies dominate their market, but China is growing faster than the US. BABA has a better balance sheet than AMZN.

Conclusion: BABA deserves a PE similar to AMZN.
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