Charlie Munger’s Alibaba Sinks Near 52-Week Low

Shares of Alibaba Group Holding Ltd. (

BABA, Financial), a major holding in
Charlie Munger (Trades, Portfolio)’s Daily Journal Corp. (DJCO, Financial), tumbled near a 52-week low on Thursday on the back of releasing fiscal second-quarter results that missed consensus estimates and slashing its revenue guidance for the year.

The Hangzhou, Zhejiang-based e-commerce giant said revenue for the quarter ending Sept. 30 were 200,690 million yuan ($31.147 billion), underperforming the Refinitiv consensus estimate of 204,930 million yuan. Despite this, revenue increased 29% from the prior-year quarter revenue of 155,059 million yuan.

Slow GDP growth weighs on e-commerce giant’s results

Alibaba CEO Daniel Zhang said during the earnings call that revenue growth moderated during the quarter due to several headwinds, including slower gross domestic product growth and intense market competition from rival retail companies like JD.com Inc. (

JD, Financial) and Pinduoduo Inc. (PDD, Financial). GuruFocus’ performance chart shows that Alibaba has underperformed both rivals over the past several years.

In September, Chinese regulators planned to break up Alibaba-owned Alipay and create a new separate application for the fintech company’s loans business. Additionally, China’s gross domestic product increased just 4.9% during the third quarter, underperforming the Reuters consensus estimate of 5.2% growth.

Shares near 52-week low on reduced revenue guidance

Shares of Alibaba traded at an intraday low of $142.52, down 11.8% from the previous close of $161.58 and approximately 2.9% above its 52-week low of $138.43. The stock is significantly undervalued based on Thursday’s price-to-GF Value ratio of 0.37.

Management said that given the current view of macroeconomic conditions and the competitive guidance, Alibaba’s full fiscal year 2022 revenue is expected to increase between 20% and 23% from the fiscal year 2021 revenue, down from the previous guidance of a 29% increase.

Munger’s Daily Journal owns 302,060 shares of Alibaba as of the third quarter, dedicating 19.86% of its $225 million equity portfolio to the stake. Based on GuruFocus data, the estimated loss on the stock is approximately 33.73% since the first quarter.

Despite the low share price, Alibaba’s financial strength ranks 7 out of 10 on the back of a strong Altman Z-score of 4.21 and debt ratios that outperform more than 80% of global competitors.

GuruFocus ranks Alibaba’s profitability 8 out of 10 on the back of profit margins and returns that are outperforming more than 80% of global competitors.

Alibaba had an equal number of guru buys and sells during the quarter

According to the Aggregated Portfolio of Gurus, a Premium feature of GuruFocus, 21 gurus bought shares of Alibaba during the quarter, while 21 gurus sold shares. Thirty-five gurus own shares of the company with a combined weight of 78.94%.