The Founder, CEO and Editor-in-Chief of Business Insider was talking to Jon Fortt and Kayla Tausche about the slowdown in the Alibaba Group Holding Ltd (NYSE:BABA) stock when he made his comment.
“I think most of the fault, sorry to point fingers, lies with investors and analysts for being a little too optimistic. This is a company that has not been public that long. We don’t have a pattern of what they are likely to do quarter to quarter. It certainly makes sense to look [and] think about what it means in terms of the slowdown. […] Folks got a little out of hand,” he said.
Nonetheless, Alibaba Group Holding Ltd (NYSE:BABA) remains a massive company that’s very profitable and still growing, Blodget noted.
Meanwhile, the executive and media personality also said that Alibaba Group Holding Ltd (NYSE:BABA)’s trouble with the Chinese government may be bigger than most would think. The company was recently hit by damaging reports from Chinese regulator who revealed that only 37% of goods on the company’s Taobao site are genuine, among other things.
It’s a risk with companies such as the electronic commerce giant, Blodget said. Furthermore, he noted that the Chinese government is currently aiming to quash corruption but that is a good thing in the long run, he said. Another risk is the massive Chinese market, he added, which a few Americans understand well.
“The government risk in China is far greater than it is here. You’ve got a government that has much more control than we are used to in Europe and the United States and so any involvement like this, Alibaba has a lot of power but it could be taken away from them instantly,” Blodget said.
As an investor, one have to concede multiples with the company, the executive suggested, because government risk has to be factored in.
John Lykouretzos’s Hoplite Capital Management owned about 1.94 million Alibaba Group Holding Ltd (NYSE:BABA) shares by the end of September.