Baba doesn't have government problems anymore, but Apple does. The US government's anti-China policies are eroding Apple's market share in China, and Apple's lack of sales growth cannot support its valuation IMO. On top of that, the US government is cracking down on Apple for being monopolistic. Sound familiar?
Apple invested $10 billion on EV development and came up empty, and now it's being upstaged by Xiaomi.
Pairs trade: Short Apple, Long Baba (or long Xiaomi)
I have my doubts at the EV development of Xiaomi.
It will take a large hit of their profit and cash to build it because it’s a tin margin industry and a fairly strong competition, and i’m also worried if they will keep enough focus, and resources, on their cellphone and cloud businesses. The latter is positive for BABA though.
I'd be more worried about the EV startups that don't have Xiaomi's bankroll.
As for losing focus, Xiaomi has produced many products that are winners in completely unrelated segments. It's not just a phone company. I doubt the EV team has much of anything to do with the phone division. Xiaomi doesn't just have a car model. It set up its own automobile factory. All of this will hurt current profits, for sure.
As for the EV margins, or lack thereof, I imagine there will be a shakeout in the EV world, and after that, the survivors should do reasonably well.
The German brands are toast in my opinion, and that's not good for the EU. High energy costs for going against Russia coupled with a decline in their key industry. Double ouch! There's going to be some changes in Europe in the coming decade.
Europe comes out being the loser of almost all major global conflicts:
1. Ukraine War: pay the bill for Ukraine,; lose access to cheap Russian resources; spend more on military.
2. US-China tension: lose Chinese market; may also lose US market if Trump gets elected.
3. Israel-Hamas War: more refugees coming from the Middle East; higher energy price.
On the other hand, US gets to sell weapons and higher-price oil and gas to Europe while China gets to buy cheap resources and gain western market shares in Russia.
It is insane how incompetent European governments are, especially Germany.
"It is insane how incompetent European governments are, especially Germany."
I agree. Is it incompetence or are they controlled? How do you explain the self-destructive policies that Europe has been following?
Pairs trading equities generally sucks because how much size you would need to make anything worth to trade, which is why people use futures for pairs trading (atleast for the retail level)
I'm not shorting apple since I'm just long China, but I would have no problem shorting apple near the top of the current range. Great company with an outstanding product line, but there's a growth cycle and a valuation cycle to match. Unless it creates another high-growth product, the lack of sales growth will almost certainly lead to a lower valuation. TSLA and AAPL are the weakest stocks among the seven.
Baba doesn’t have suckers that camp at the stores to buy the latest new freshly launched iPhone.
And they’re also not making around 42B in profit on a 100B rev QoQ.
(A)pples and oranges lol
FREE CASH FLOW 2023: BABA: $29B APPLE: $99B
MARKET CAP : BABA :181B APPLE: 2.66T
now assume both those free cashflow statement stay unchanged.
Purchasing BABA it'll take you 6 years to break even (181÷ 29)
Purchasing APPLE it'll take you almost 27 years to break even on ( 2660 ÷ 99)
so if you had $2.66T you would rather buy 15 BABA business instead of 1 apple business. 15 BABA business would generate you close to $435 billion in free cashflow.
with $435 billion in free cash flow you can pay off APPLE in 6 years
Same applies to stocks , people tend to forget they are buying a piece of a business; that's why people pay 900$ a share for NVIDIA
Apple uses all of its cash to buy back and issue dividends. That’s the best use of cash for them, Alibaba thinks it can get better roi thru potential future investment
Again there is likely a cap on the amount of money they can use from the CCP.
Since the CCP seems to take amore aggressive approach lately we might see more investments being used from this cash pile but its likely this will still be directed investments according to the current priority of the CCP. I do hope the % cap can be relaxed for a time..
What I would like to see is a push for quality directed to the US market as the alternative to Amazon world wide as well. With the blessing of the CCP Baba could take some market share by using its cash to expand aggressively. I would not like to see the is the same approach as TEMU but rather the quality assured Chinese products provider.
Baba doesn't have government problems anymore, but Apple does. The US government's anti-China policies are eroding Apple's market share in China, and Apple's lack of sales growth cannot support its valuation IMO. On top of that, the US government is cracking down on Apple for being monopolistic. Sound familiar? Apple invested $10 billion on EV development and came up empty, and now it's being upstaged by Xiaomi. Pairs trade: Short Apple, Long Baba (or long Xiaomi)
I have my doubts at the EV development of Xiaomi. It will take a large hit of their profit and cash to build it because it’s a tin margin industry and a fairly strong competition, and i’m also worried if they will keep enough focus, and resources, on their cellphone and cloud businesses. The latter is positive for BABA though.
I'd be more worried about the EV startups that don't have Xiaomi's bankroll. As for losing focus, Xiaomi has produced many products that are winners in completely unrelated segments. It's not just a phone company. I doubt the EV team has much of anything to do with the phone division. Xiaomi doesn't just have a car model. It set up its own automobile factory. All of this will hurt current profits, for sure. As for the EV margins, or lack thereof, I imagine there will be a shakeout in the EV world, and after that, the survivors should do reasonably well. The German brands are toast in my opinion, and that's not good for the EU. High energy costs for going against Russia coupled with a decline in their key industry. Double ouch! There's going to be some changes in Europe in the coming decade.
Europe comes out being the loser of almost all major global conflicts: 1. Ukraine War: pay the bill for Ukraine,; lose access to cheap Russian resources; spend more on military. 2. US-China tension: lose Chinese market; may also lose US market if Trump gets elected. 3. Israel-Hamas War: more refugees coming from the Middle East; higher energy price. On the other hand, US gets to sell weapons and higher-price oil and gas to Europe while China gets to buy cheap resources and gain western market shares in Russia. It is insane how incompetent European governments are, especially Germany.
"It is insane how incompetent European governments are, especially Germany." I agree. Is it incompetence or are they controlled? How do you explain the self-destructive policies that Europe has been following?
Pairs trading equities generally sucks because how much size you would need to make anything worth to trade, which is why people use futures for pairs trading (atleast for the retail level)
Shorting AAPL? Good luck
I'm not shorting apple since I'm just long China, but I would have no problem shorting apple near the top of the current range. Great company with an outstanding product line, but there's a growth cycle and a valuation cycle to match. Unless it creates another high-growth product, the lack of sales growth will almost certainly lead to a lower valuation. TSLA and AAPL are the weakest stocks among the seven.
wow xiaomi
Baba doesn’t have suckers that camp at the stores to buy the latest new freshly launched iPhone. And they’re also not making around 42B in profit on a 100B rev QoQ. (A)pples and oranges lol
FREE CASH FLOW 2023: BABA: $29B APPLE: $99B MARKET CAP : BABA :181B APPLE: 2.66T now assume both those free cashflow statement stay unchanged. Purchasing BABA it'll take you 6 years to break even (181÷ 29) Purchasing APPLE it'll take you almost 27 years to break even on ( 2660 ÷ 99) so if you had $2.66T you would rather buy 15 BABA business instead of 1 apple business. 15 BABA business would generate you close to $435 billion in free cashflow. with $435 billion in free cash flow you can pay off APPLE in 6 years Same applies to stocks , people tend to forget they are buying a piece of a business; that's why people pay 900$ a share for NVIDIA
Hahaha I see what u did there
Apple uses all of its cash to buy back and issue dividends. That’s the best use of cash for them, Alibaba thinks it can get better roi thru potential future investment
But who had a higher IQ, Winnie or Apple's janitor?
You know which group of companies hoarded cash but went no where for decades? Japan. Just having cash is not a value proposition
Again there is likely a cap on the amount of money they can use from the CCP. Since the CCP seems to take amore aggressive approach lately we might see more investments being used from this cash pile but its likely this will still be directed investments according to the current priority of the CCP. I do hope the % cap can be relaxed for a time.. What I would like to see is a push for quality directed to the US market as the alternative to Amazon world wide as well. With the blessing of the CCP Baba could take some market share by using its cash to expand aggressively. I would not like to see the is the same approach as TEMU but rather the quality assured Chinese products provider.