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Alibaba Group Holding Ltd (BABA): A PE Ratio Of 25 Is Not The Best Time To Get On Board

Alibaba Group Holding Ltd (NYSE:BABA) is the largest e-commerce company with almost $220 billion in market capitalization and the company keeps on growing. According to sources, it will still see increasing revenues in China due to online retail accounting for about 12% of total retail values in the region by 2017. So, the company is secured for the relatively short term and it has the possibility to expand its group, which Alibaba Group Holding Ltd (NYSE:BABA) is actively doing.

Largest Online Retailers in the World

Re/code reported recently that the Chinese giant invested $50 million in entertainment app developer Peel. This relatively small investment, about 0.2% of what the company made on the day of its Initial Public Offering, will fortify Alibaba Group Holding Ltd (NYSE:BABA)’s position as a media, messaging and gaming service provider. The application has been installed on 96 million devices, the fact which brought the investment in the company, but according to the same source, Alibaba Group Holding Ltd (NYSE:BABA) did not ask or require that its e-commerce experiences be integrated in the app.

These patient investors, as they are referred to, have a database with details over transactions performed by 9m sellers and 280m online shoppers, which allows them to be the support small companies they invest in need. As it seems, Alibaba Group Holding Ltd (NYSE:BABA) is a company well aware of its possibilities and very attentive at decisions taken, so the business promises an attractive return for investors. However, it’s not suggested to take long exposure to its stock in the near future because markets haven’t gathered enough information to fairly price the company’s assets.

Alibaba Group Holding Ltd (NYSE:BABA) shares trade at approximately $87.3 apiece and this is some 25 times the 2016 estimates for its earnings per share. So, as long as there’s over-excitement with respect to China’s e-commerce talent it will be wiser to take some time before making any major investments. Probably, you will be able to get a deal at a fairer price.

Disclosure: none
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