Latest Headline Gives Fresh Reason to Buy Alibaba Stock

Alibaba (NYSE:BABA) co-founder Jack Ma’s rumored arrest sparked shivers amongst investors last Tuesday, sending shares of the Chinese e-commerce juggernaut tumbling, costing the e-commerce giant $26 billion in value. Overall, BABA stock has been down 46.21% in the last six months.

Billionaire Ma hasn’t been seen in public for a while now. The Chinese government is cracking down on the country’s big businesses, and Alibaba has borne the brunt of these issues. Chinese authorities have arrested a person with the same name as Ma, which is very common in China. On Tuesday, authorities reportedly arrested the person for a possible national security offense.

The arrest took place in the Chinese city of Hangzhou. Incidentally, this is where Alibaba is headquartered. It made for an interesting story and added more fear to the reader’s curiosity about what will happen next.

Once it became clear that this was not Jack Ma, BABA stock recovered its losses. However, the markets remain tense.

The Chinese regulatory environment makes it tough to make a solid prediction regarding any enterprise at the moment. However, with its strong history and unique position across several sectors, BABA makes it hard to ignore. Despite the recent issues it faces, the company remains a cut above the rest, with 1.28 billion active consumers.

There are plenty of risks facing the stock, and there’s still no price to draw a line for it. This could mean that this is the perfect time to invest in the company. It’s not often you can buy BABA at 1.85 times price-to-sales.

BABA Stock: A Risk Worth Taking

For anyone who wants to take a risk and invest in Alibaba, it’s hard to argue against the growth trajectory as it has nearly mirrored that of Amazon (NASDAQ:AMZN). The only issue hanging over investors’ heads is the regulatory pressure the company will face.

The company’s December quarter earnings report showed signs that Beijing’s efforts to crack down were beginning to impact. China’s revenue grew slower and more slowly, with growth in the core China commerce sector sliding to just 10%.

Going by the past 12 months and the implications of US sanctions on Russia, stocks in China are not a risk-free investment. Investing in Alibaba stock makes sense if the regulatory crackdown eases.

There are signs from the Chinese administration that we could see this happening soon.  The risk-tolerant investor should consider Chinese stocks in their portfolio. And in terms of Chinese stocks, you can not get any better than BABA.

On the publication date, Faizan Farooque 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 InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


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