Alibaba Alert: Charlie Munger Cuts BABA Stock Stake in Half. Should You?

BABA - Alibaba Alert: Charlie Munger Cuts BABA Stock Stake in Half. Should You?

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At one time, Alibaba Group Holdings (NYSE: BABA) could do no wrong.

In fact, between 2019 and 2020, the stock exploded from a double bottom low of $130 to a high of $315.46.

Unfortunately, that’s where the stock fell off a cliff to $95.77 — all thanks to a slowing Chinese economy, supply chain issues, covid and heavy competition. Regulatory issues are also still on the table, too. While China eased auditing rules, with concessions to U.S. regulators, the U.S. hasn’t accepted it yet. Plus, we have to consider investors are cutting back on tech stocks, with the Federal Reserve ready to hike rates.

For one, according to Altron Capital Management, as quoted by Insider Monkey: “The negative headlines surrounding Alibaba seemingly have no end and have certainly tested our conviction in this investment over the past half year or so. The company’s latest earnings report brought lower margins, partially because of slowdown in China and partially because of increased investment into its businesses. Alibaba also lowered its guidance for the coming year, adding even more pressure to the share price.”

JP Morgan analyst Alex Yao, for example, recently cut his firm’s revenue forecast for 2022 and 2023, by 2% and 5%, respectively. According to Yao, as noted by There are still “downside risks to… consensus expectation for March quarter and June quarter results” in 2022, as “the impact from the COVID-19 resurgence negatively affects the domestic ecommerce operation. The resurgence of COVID-19 cases forced Shanghai to go into a full lockdown on 1 April.”

TipRanks added that Shanghai accounts for about 4% of BABA retail sales in China.

With all of that negativity, it’s really no shock that Charlie Munger’s Daily Journal cut its BABA stake by half.  Munger has not commented just yet. If it were me, I would have sold the full position a long time ago. The downtrend still isn’t over yet, with plenty of uncertainty left.

Eventually, BABA could be a great “blood in the streets” trade, but not now. Give it time.

On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Ian Cooper, a contributor to, has been analyzing stocks and options for web-based advisories since 1999.

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