BABA: Adding Alibaba to Investing Ideas (Short Side)

03/05/20 10:31AM EST

Hedgeye CEO Keith McCullough is adding Alibaba (BABA) to the short side of Investing Ideas. Below is a brief note.

Another way to think about shorting the Chinese Equity market bounce is shorting one of its largest (and widely held) stocks, Alibaba (BABA). Our China Analyst, Felix Wang, just went bearish on the name.

Here's a summary excerpt of his bear thesis:

We had already seen some kinks in BABA's seemingly impenetrable armor before COVID-19 but the virus greatly amplified the risks ahead for BABA. Sellside is complacent, and consensus calls for a V-shaped recovery in China beginning in April. We believe the recovery process will take longer.  Even if the virus is contained and demand & supply conditions are normalized, Alibaba will face more difficulties than its peers.
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