Alibaba Group Holding Ltd (NYSE: BABA), the Chinese based online and mobile commerce giant is going through hard times. The share price of the company has fallen below the IPO price $68 recently, and has continued to decline. Overall, the stock of the company fell in value by more than 40% since the beginning of the year.
An article posted on Barron’s September 14th issue raised the problems the company is facing. Mostly, Alibaba’s bearish projections are based on China’s struggling economy, increasing competition in e-commerce as well as more scrutiny of the company’s culture and governance. The conclusion was that can potentially fall 50% further. Alibaba’s investors took the critique quite seriously, and shares fell more than 4% in early Monday trading.
Alibaba, has responded to the article, defending its own financial situation and business strength. The company’s spokesman Bob Christie has explained in an internet letter that the bearish article against Alibaba “contains factual inaccuracies and selective use of information, and the conclusions the reporter draws are misleading.”
According to Alibaba, the price-earnings multiple comparison analysis that reported in said article does not represent an accurate situation. The analysis includes e-commerce companies like eBay (NASDAQ:EBAY), which does connect buyers and sellers similarly to Alibaba, but does not operate in China, and hence is not directly competing with the Chinese based e-commerce.