ALIBABA (BABA) FAIR VALUE CALCULATION

March 25, 2021 0 By bullheadedbear

Welcome to the Alibaba (BABA) fair value calculation, which is split into the below sections:

CURRENT PRICE VALUATIONS
10 YR FUTURE PRICE VALUATIONS
INTERNAL RATE OF RETURN

BULL HEADED BEAR BUY CONCLUSION

As mentioned in the February Portfolio Update, I’m currently running more companies through my models to help me prioritise further analysis. I hope you find this post interesting and get value from it, but please note this is not investment advice. These are models using financial data and forecasts as well as my assumptions. They do not consider the company, market or economic events. Please ensure you read the full disclaimer and disclosure at the bottom of this post.

CURRENT PRICE VALUATION MODELS:

The below prices come from personally developed models using a combination of historical financials, analysts projections and my own assumptions. I also use Finbox financial models to help challenge or confirm my own assumptions and valuations but don’t count them in my weighted sum.

MODELFORECASTSPRICEWEIGHT
DCF – Discounted Cash FlowAnalysts$282.5650%
DCF – Discounted Cash FlowBull Headed Bear$242.0850%
FINBOX FAIR VALUE$254.650%
WEIGHTED AVERAGE PRICE$262.32

10YR FUTURE PRICE VALUATIONS MODELS:

The below prices come from personally developed models using a combination of historical financials, analysts projections and my assumptions.

MODELFORECASTPRICEWEIGHT
EV\EBITDA MULTIPLEAnalysts$727.4525%
EV\EBITDA MULTIPLEBull Headed Bear$547.7325%
FCF GROWTHAnalysts$883.5425%
FCF GROWTHBull Headed Bear$888.5725%
WEIGHTED AVERAGE PRICE$761.82

INTERNAL RATE OF RETURN (IRR)

Here we use the current and future fair value calculations to understand the Internal Rate of Return. We will look at the return for the current price (24.03.21) and other potential support and resistance zones.

PRICE ZONEPRICEIRR
UPPER PRICE ZONE$25218.9%
CURRENT PRICE ZONE$22920.5%
LOWER PRICE ZONE 1$22121.2%
LOWER PRICE ZONE 2$21122%

BULL HEADED BEAR BUY CONCLUSION

The Alibaba (BABA) fair value calculation shows it could be undervalued at the moment, based on the financials and forecasts. Some warnings come with Alibaba (#BABA) due to the ongoing compliance and regulations crackdowns from the Chinese government and the US exchanges. This is part of what is holding the price down. Alibaba is already a position in the BULL HEADED BEAR portfolio; however, we might add more if the price drops to the lower price zones of $221 – $221.

DISCLAIMER:

All opinions and assumptions made are my own and should not be viewed as investment advice. All investments involve risk, and investors can get back less than they invested. I am not a financial advisor, and your investments are solely your own responsibility. You must do your own research and come to your own conclusions. These models are based primarily on historical and forecasted financials available on 03.03.2021. Business, market & economic events and sentiment can change at any time. Therefore, I have the right to change my opinions and assumptions at any time.

DISCLOSURE:

Alibaba (#BABA) is a current holding in the BULL HEADED BEAR portfolio. The first purchase was made in May 2020. Additional purchases have been made since, with the latest being on 08.03.21. It is still on the watchlist, and I may add to the position if target prices are met and the risk feels appropriate for the potential reward.