Instead of getting concerned after the Chinese government halted the nearly $60 billion Ant Group IPO, investors bought Alibaba (NYSE:BABA) shares in the last week. The buying on the dip could reward value investors. If the government lets the IPO proceed or there is any hint of improving U.S./China relations, then this e-commerce giant will resume its uptrend.
Alibaba fell when Ant’s IPO delay cut its market capitalization by $60 billion in just one day. So, even though the Chinese internet retail firm at 27 times earnings is a better value than Amazon.com (NASDAQ:AMZN) at 90 times, BABA stock is on sale for a reason. Regulators may delay the IPO indefinitely or introduce unfavorable rules that would hurt Alibaba’s growth.
JD.com (NASDAQ:JD) investors do not need to worry as much. The stock bounced back sharply from the $80 low. Besides, the Chinese government wants to send a message to Alibaba founder Jack Ma, not JD.com. Buying Alibaba when hedge fund managers have a mixed opinion will yield random results. David Tepper trimmed his Alibaba position while Dan Loeb added to it.
Investors with a three-to-five-year holding period will look back at this news as noise. Alibaba is on sale and offers exposure to the strong Chinese economy.
