The downward trend in Alibaba (NYSE:BABA) continues. Just since early June, BABA stock has lost nearly one-third of its value. Incredibly, that means Alibaba stock has lost roughly $180 billion in market value — in less than five months.

As a result, BABA stock looks rather cheap. Alibaba stock trades at 20 times fiscal year 2019 earnings-per-share estimates and below 19x after backing out the company’s net cash. Against the company’s near-term and long-term growth potential, that multiple seems close to absurd. And I’d imagine some investors are believing (or hoping) that fiscal Q2 earnings next week will remind investors of that fact.

But I’ve continued to argue that Alibaba stock can and will get cheaper, most recently last month. And even with the stock trading so low and earnings on the way, I’m not yet ready to reverse course.

There are real concerns here about Alibaba itself and the Chinese economy more broadly. Those concerns aren’t going away after a single quarterly report. And if Alibaba shows any weakness when it reports next Friday, it could bring other Chinese stocks down with it.

The Uncertainty Problem for Alibaba Stock

It’s quite clear that the market right now is not interested in uncertainty. The problem for BABA is that, despite an attractive story, the stock itself is full of uncertainty.

After all, Alibaba shareholders don’t actually own shares of the company, but a Cayman Islands-based VIE (variable interest entity). That complexity is seen throughout the company, with an interlocking web of subsidiaries, shared directors, and occasionally external investors. This, in turn, leads to questions surrounding the company’s accounting and its reported GMV (gross merchandise volume).

Those issues themselves are enough to keep some investors away. They’re amplified at the moment by long-running questions about China as a whole. Few observers trust that country’s growth figures. And China, at least so far, clearly is a loser in the current trade war with the U.S.

As result, Chinese stocks remain in a bear market to the point that the 32% decline in BABA stock from its 52-week high isn’t that bad. Rival JD.com (NASDAQ:JD) is off 56%. iQiyi (NASDAQ:IQ), the so-called Netflix (NASDAQ:NFLX) of China, is off by half, and Weibo (NASDAQ:WB) has lost 60% of its value. A weaker yuan has contributed, but the declines are mostly a result of a more cautious outlook toward China as a whole. Perhaps somewhat incredibly, even down almost a third, it seems like it could be worse for Alibaba stock.

Buy the Dip in BABA Stock?

To be sure, those declines have made Chinese stocks, including BABA, much cheaper. And to some investors, it opens a clear buying opportunity. Trade war concerns will pass at some point. China still is on a path to becoming the world’s largest economy at some point in the future, if only based on the sheer size of its population. Alibaba’s competitive position in the country hasn’t changed, at least not per the market. If second-place JD is down more than BABA, that hardly suggests the market is pricing in some sort of market share erosion for Alibaba itself.

Meanwhile, Alibaba continues to post impressive revenue growth. Ahead of an earnings report next week, I can see why investors would see a positive risk/reward here. After all, something close to the worst-case scenario here is priced in, right?

Not necessarily. Alibaba already has signaled that margins will continue to come down, as was the case in fiscal Q1. Earnings estimates have been lowered as a result. Alibaba stock is down 10% over the last month, for instance — but its forward earnings multiple hasn’t changed.

Alibaba would need to post an unbelievable quarter to change that trend — and even that might not be enough. The worries here are about what is going to happen in China in 2019 and 2023 — not what happened to Alibaba in the September quarter of 2018. It’s hard to see how Alibaba earnings can offset the external concerns here. And as we’ve seen in other struggling areas of the market — like semiconductors and cyclicals — good numbers aren’t enough. I don’t think they will be for BABA stock either.

Long-Term Case for Alibaba Stock

Near-term, then, I’m not quite ready to call the bottom for Alibaba stock. Long-term, I do see some value here — and likely some upside from current levels at some point.

But it’s hard to make a compelling case for BABA stock here, ahead of earnings. If an investor believes the sell-off in China is overdone, there are better options out there. Other Chinese stocks have fallen harder. U.S. casino operators Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) should rebound sharply if and when sentiment toward the Chinese market changes, given their important operations in Macau.

And if an investor doesn’t see the rebound on the way, there are easier ways to make money in a suddenly much cheaper market. Picking up BABA right here, right now, isn’t necessarily a terrible play. But I’m not sure the timing is right. And if it is, Alibaba stock itself probably isn’t.

As of this writing, Vince Martin has no positions in any securities mentioned.