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Alibaba Has Bottomed

I should begin this column by acknowledging up front that this will be a controversial recommendation and not appropriate for our more conservative readers. The company in question, Alibaba Group (NYSE:BABA), has been under a great deal of scrutiny in recent days in part because of a negative article published by Barron's.

The stock has fallen from a high of $120 a year ago to $59.24 as of Friday's close (figures in U.S. dollars). That means it's now below its IPO price of $68. This IPO was the largest in history, raising $22 billion when the company went public last year. This may well be the epitome of a high-risk, high-reward stock opportunity.

For those who are not familiar with Alibaba, it's the Chinese equivalent of Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY). There are several ancillary businesses attached to this massive e-commerce company, which operates under the Alibaba Group Holding banner. They include Taobao, Tmall, eTao and Juhuasuan.

Jack Ma, whose personal story is well documented in financial publications but bears repeating, founded Alibaba. Ma was a poor boy hanging around hotels in Hangzhou, giving free sightseeing excursions to tourists so he could learn English. He could see the commercial potential of the Internet despite having no programming ability or technical knowledge. He gathered a group of friends and developed a plan to become the premier player in the Chinese e-commerce industry. A more improbable tale you could not imagine and it will probably one day become a movie script. Ma remains the company's chief booster and is a compelling but self-depreciating CEO who has amassed a huge personal fortune from extremely modest...


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