In the legend of Ali baba, he stumbles upon a secret cave of gold and treasure hidden by 40 thieves. Ali learns the secret message (“open sesame”) to open the cave and steals the treasures.
Alibaba vs Amazon
From its humble beginning as an Amazon wannabe, Alibaba (BABA) is a big data Chinese conglomerate, listed 4 years ago on the NYSE. However, https://www.alibabagroup.com/en/ir/home is not like Amazon in that it is not a retailer. It merely provides the digital shelves and aisles for other merchants to sell their goods to Moms.
At the same time, Amazon’s capital-intensive, razor-thin profit margins business is simply no match for Alibaba’s asset-light business model. Alibaba’s free cash flow allowed its balance sheet to end up with a net cash position.
Nowhere is it more evident that with Alibaba E-commerce, merchants can extend into other growth avenues. Data from its marketplace, financial services and logistics allows BABA to move into cloud computing, media and entertainment. The trade war may temporarily slow down Alibaba’s momentum, but so far, all signs point towards ongoing strong double-digit growth.
BABA “marketplace” boasts 600 million active buyers. Expansion into the rest of the world provides even more opportunities. Even though Alibaba’s stock has gotten punished in recent months; fundamentally nothing has really changed and their corporate strategy is sound. Once the trade war is resolved, Alibaba stands to be one of the main beneficiaries and should see its punished stock price rapidly getting lifted. BABA is a compelling steal for “Arabian thieves”.
Mom’s Takeaway Action
July 17, 2019 BABA share price was $174.82 ARE YOU A BULL OR BEAR ?
If you are a bullish Mom on the heels of 40 thieves, try the September 20 CALL – $170 Bid and $165 Ask strike prices (Long Call Vertical Spread) on http://TDAmeritrade.com – Premium is $3.40 debit to pay.
On the other hand, Mom, if you think that secret cave of treasures is dwindling down, try the September 20 PUT – $170 Ask, and $165 Bid strike prices (Long Put Vertical Spread) on http://TastyWorks.com – Premium is $1.95 debit to pay.
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