With Chinese equities markets in free-fall, even those companies of an international scale are taking a beating. China’s Alibaba group has been one of the country’s major global success stories for years now, but even that shining example of entrepreneurship seems unlikely to weather the country’s domestic economic storms. While alibaba stock has not declined to the extent that the issues of many major Chinese manufacturers have experienced, the company’s valuation has retreated significantly from its highs of a year ago and seems to be headed further to the south.
Beyond the widespread malaise afflicting the Chinese economy in general, there are a number of factors undermining the alibaba stock price at the present time. One of the most prominent of these is that the company has become something of a victim of its own success. With long-term investors and speculators alike having priced into the company’s stock price a healthy, optimistic vision for its future, even the smallest of stumbles have come to seem like major mistakes in that context.
Part of the reason for this is that founder and facebook stock chairman Jack Ma has been unambiguously ambitious about his goals for the company in the past, making promises that have since sometimes come to seem a little over-inflated. The record highs set by the alibaba stock a year ago reflect a level of confidence in Ma’s pronouncements that might not be likely to return anytime soon, with investors having since become accustomed to a far better grounded view of the company’s situation and prospects.
While those factors undoubtedly matter, the real question remains the future of the Chinese economy in general. Even as Alibaba positions itself as a global marketplace for buyers and sellers, the fact is that its growth has come largely as a result of its ability to connect Chinese manufacturers to the rest of the world. With many of those companies still contracting at fast rates, it remains to be seen how much support that existing mission can provide to the alibaba stock price today.
In the end, it may be that Alibaba’s best hopes lie in a longtime project to bring aboard smaller companies in other emerging economies. While Ma has also been forthright about wanting to make it easier for businesses in Indonesia, India, Malaysia and elsewhere to join up, he has so far been mostly unsuccessful in his efforts to do so. Should he succeed and a number of other things go right, it may be that Alibaba’s stock will eclipse its previous record before long.