- ARRIVING LATE TO THE PARTY: There isn't much that we all didn't already know. GMV growth has slowed precipitously, the subsidiary structure is complicated, counterfeit goods are a concern, China macro is headwind, and so on and so forth. But Barron's bear case is not so much on the above factors, but rather the implication that BABA is making up its reported metrics. Its basis is largely driven off a quote from another BABA analyst, and a rather weak comparison of BABA's reported metrics to China demographic data.
- AFTER ONE TOO MANY: Barron's first takes issue with the fact that BABA's active buyers are roughly the same size as the Chinese e-commerce population reported by CNNIC (Dec 2014). Remember that BABA has +80% market share, so this shouldn't be a surprise to any of us. Second, Barron's twisted the demographic analysis we shared with them: that BABA's average consumer spends well in excess of what the average Chinese consumer could afford. That doesn't mean that BABA is fudging the numbers as the article implies, it just means that China's Elite and/or Group Buying is driving BABA's GMV. We explained this to the author, he chose to omit it.
Note that we have covered our short position in BABA, but we have included a set of notes below that covers the major themes behind our bearish thesis. Let us know if you have any questions, or would like to discuss in more detail.
BABA: What the Street is Missing
11/26/14 08:03 AM EST
BABA: Model Facing Secular Pressure
12/04/14 09:17 AM EST
BABA: The Mobile Debate
03/04/15 10:34 AM EST
BABA: Solid Pushback → Same Conclusion
03/31/15 08:12 AM EDT