Alibaba’s value is down $70 billion since its high in November of last year. A Bloomberg Business analysis says that the reason is mainly that the Chinese economy has slowed and the Alibaba strategy for growth has not yet gotten its footing. The combination of expansion into China’s hinterlands and into foreign markets is in play, but has not borne much fruit to now; meanwhile, these market expansion strategies costs are here now and they are expensive.
Alibaba is caught in the same twisted logic that China, as a whole, finds itself; both are growing faster than everybody else, but the growth is slowing, which turns a positive story into a negative. Example: The Company’s revenue for the fourth quarter of 2014 is expected to rise by 41% to US$ 2.7 billion – not bad. However, the past seven quarters averaged 50% growth, hence the negative story. Source: BloombergBusiness