Indeed, MKM Partners recently valued Alibaba’s disparate pieces and concluded that the Chinese Internet retailer’s stock was worth $130 per share, according to Barron’s.
BABA Shares Worth More Than Today’s Market Price
Alibaba shares are trading at around $95 per share.
“Declaring a stock is mispriced by 35% or more may seem like a hustle at a time when Wall Street is desperate for business, but such skepticism is misplaced,” says Barron’s.
Sum-of-the-parts valuations are often helpful reminders of a company’s potential when investors face trouble understanding the business. Alibaba, which has just began to better explain itself to investors, has always been considered a company that is “hard-to-fathom,” says Barron’s.
Rob Sanderson of MKM broke the business into its many components for his valuation. Alibaba’s e-commerce business was found to be worth $94 a share — almost equal to the current stock price, while its cloud computing business was determined to be worth $18 per share.
MKM states that Ant Financial — an online payment processor and bank that is sometimes compared to Paypal Holdings Inc (PYPL) — adds $8 per share to Alibaba’s worth. Alibaba owns 33% of the company.
Many expect Ant, which has recently been valued at around $60 billion, to go public in the first half of 2017.
According to Sanderson, the mark-to-market value of the publicly-traded companies in Alibaba’s portfolio has been valued at around $13 billion, making up $5 per share if its valuation. Another $5 per share is added to MKM’s valuation by digital media and cash.
Alibaba Is Among the Best Long-Term Picks
Alibaba’s stock is touching new heights fueled by excellent quarterly earnings and the Street’s optimism. The stock is one of the best picks in the e-commerce industry. The company’s financial performance has been quite impressive, and it also has a promising future in cloud computing.
Alibaba’s stock is unique because it entered new segments and has a different perception of e-commerce, states The Country Caller. Jack Ma made a move into e-sports and aligned VR with e-commerce, making it easier for customers to make choices.
On Monday, Alibaba closed down 0.19% at $94.88 but is ahead in early morning trading on Tuesday. Year to date, the stock is up more than 16%, while in the last year, it is up more than 35%. The stock has a 52-week high of $98.86 and a 52-week low of $57.20.
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