Recently, Charlie Munger, a partner of Warren Buffett, disclosed that Daily Journal Corp. Daily Journal Corp., a subsidiary of Warren Buffett’s partner Charlie Munger, disclosed that by the end of March, Daily Journal Corp. had accumulated 165,300 shares of Alibaba’s ADRs, with a market value of about $37.5 million (RMB 246 million).
Charlie Munger has staged a precise plunge after the shortfall, is Alibaba really the return of the king?
Since the termination of the IPO of Ant Financial Services in November last year, the market has been worried about the heavy hand of the regulator on Ali, which will have a significant impact on the company’s business, and the share price of Ali, a top-performing stock, has fallen all the way to the highest point of the bull market of Chinese stocks from this round, Alibaba’s maximum decline has reached 35.22%, and the market value evaporated more than $250 billion (about RMB 1.6 trillion) The market value has evaporated by more than $250 billion (about RMB 1.6 trillion).
After the shortfall, Charlie Munger staged a precise plunge, and Alibaba really returned to the king?
Recently the General Administration of Market Supervision imposed a fine of 18.2 billion yuan on Alibaba according to the Anti-monopoly Law, which seems to be a huge amount, but in fact it is only one month of Alibaba’s net profit. The market has been worried whether Ali will suffer a split like the monopoly Microsoft did back then, until the penalty landed, the market was relieved, and the capital market was not only not pessimistic about the negative 18.2 billion penalty, but also In response to the $18.2 billion penalty, the capital markets not only did not feel pessimistic, but also responded with a 9.27% jump, which shows how much Alibaba’s value is recognized in the capital community.
In the investment world, the famous Charlie Munger has always been “people abandoned me to take the reverse investment” walking in the jungle, whenever its preferred company fell sharply when the value of investment, it will take a plunge, and this time is no exception.
As the e-commerce giant Alibaba, both revenue and profit delivery and future growth prospects have been the “top students” in the Chinese stocks, 10 years, revenue compound annual growth rate of 49.87%, the compound annual growth rate of net profit is as high as 56.13%.
Charlie Munger staged a precise plunge after the shortfall, Alibaba is really the return of the king?
Even if the volume of the elephant is already the Internet giant, it is still galloping and dancing, no wonder it is coveted by the God of Stock Warren Buffett Partners.
Technology flood rolls forward, the god of investment is also afraid to step in the air
The 97-year-old Charlie Munger, like Warren Buffett, has not been too fond of relying on “change” to make a profit, instead, this pair of national treasures in the investment world master always sagely admonish the younger generation, the secret of their success is to cross a foot-high bar – invest in stable growth The secret of their success is to cross the one-foot high bar – investing in stable growth “consumer goods companies” – rather than the seven-foot high bar – investing in explosive growth and fast-changing “technology companies”.
However, this is not the first time that the big man has invested in technology stocks, according to public information, as early as from the 1st quarter of 2016, Warren Buffett and Munger jointly operated Berkshire Hathaway began to buy the consumer electronics giant “Apple”, as of December 31, 2020, Berkshire Hathaway holds a total of 120.4 billion U.S. dollars of Apple shares, more exaggerated is that the mouth said no, but the body is very honest, hard to buy and buy, bought into the first long position in the stock.
Later, in mid-December 2020, Charlie Munger said in an in-depth interview at Caltech that he did not invest in Apple because he was optimistic about the power of technology and innovation, but purely because he did not want to be “left behind” by the rapidly changing times.
In his 75-year investment career, Charlie Munger confessed that he has not been investing in technology stocks is afraid of change, afraid of fast-changing technological innovation so that the technology company’s moat constantly new digging, and the need to constantly invest capital repeatedly digging moat equal to no moat.
Change, is the great enemy of long-term sustainable growth in earnings, short-term growth is easy, it is difficult to sustain long-term growth.
The foundation of an evergreen business is the unattainable dream of every enterprise, 97-year-old Munger has seen too many technology companies floating and sinking, life and death, so, in the past long investment career, Buffett Munger are “unchanged” to “change”. Prefer to invest in stable growth of consumer stocks and sit firmly on the fishing platform.
However, the only constant is change, even almost abide by a lifetime of “do not step into the circle of technological capabilities” Munger have changed, Alibaba in fact what kind of charm, so that this 75 years not easily out of the circle of the big brother turned out of the circle?
Why does Charlie Munger, who does not love “technology” and loves “consumption”, prefer Alibaba?
E-commerce, fundamentally speaking, is not an industry, because any industry can be grafted to e-commerce to complete the rapid growth of online channels. E-commerce is essentially an emerging online retail channel, and since it is a retail channel, the core motivation for its development is the same as the nature of retail industry development drivers – efficiency and cost-driven industry change and development.
Over the past decade, the efficiency and low cost of the online channel have been used to combat the inefficiency and high cost of the offline channel, thus completing the substitution of the online e-commerce channel for the offline channel. The core logic driving the rapid growth of e-commerce is the increase in online penetration.
The global e-commerce penetration rate has increased significantly due to the epidemic, and overseas e-commerce has seen rapid growth as a large number of consumers who never shopped online moved from offline to online in the context of the 2020 epidemic. In the U.S. and the U.K., for example, the e-commerce penetration rate in the U.S. increased significantly as the epidemic deepened. 2020 Q2 saw the e-commerce penetration rate in the U.S. rise from 12% to 16%.
After the shortfall, Charlie Munger staged a precise plunge, Alibaba really return of the king?
The epidemic accelerated the catalyst, the penetration rate to drive performance growth, overlaid with the valuation of monetary liquidity flooding, the U.S. shares of leading e-commerce companies is a bright and eye-catching performance, 2020 year Poundland, Amazon, Jingdong shares rose 3.7 times, 76.26%, 1.5 times, respectively.
Charlie Munger staged a precise plunge after the shortfall, Alibaba is really the return of the king?
Charlie Munger staged a precise plunge after the shortfall, Alibaba is really the return of the king?
With the end of the smartphone and Internet popularity dividend, the overall penetration rate of online retailing is close to 20%, ranking first in the world.
After the shortfall, Charlie Munger staged a precise bottoming out, Alibaba is really the return of the king?
China’s e-commerce has long passed the era of ultra-high growth, and the overall growth rate has gradually declined in recent years.
Charlie Munger staged a precise bottoming out after the shortfall, Alibaba is really the return of the king?
From the industry growth rate and penetration rate, China’s e-commerce environment of ultra-high-speed growth is gradually moving towards conventional growth, the industry life cycle is in the stage of growth into maturity.
However, even though the industry growth rate continues to decline, Alibaba still maintains a high growth rate much higher than the industry growth rate, with revenue expected to reach 509.7 billion in FY2020, a 35.26% year-over-year increase in revenue, and net profit expected to reach 149.4 billion, a 70.03% year-over-year increase.
On the one hand, Alibaba’s excellent business ability, on the other hand, the Internet ecology “strong is always strong” the Matthew effect constitutes a huge first mover advantage and strong moat of the Internet giant.
For Alibaba, as China’s e-commerce business is maturing, even if the industry is maturing, it does not mean that growth is stagnant, as the leading Ali platform e-commerce business can still benefit from the long-term increase in online channel penetration and the long-term growth in social retail sales driven by higher per capita income levels.
Looking at Alibaba’s revenue structure in recent years, its core business “core commerce” has been at a high of around 85% of revenue, up 33.9 percent year-over-year, cloud computing revenue at 8%, up 58.5% year-over-year, and digital media and entertainment revenue at 4.5%, up 9% year-over-year.
Charlie Munger staged a precise plunge after the bearishness was over, is Alibaba really the return of the king?
This shows that Alibaba’s value comes from 2 aspects: the growth of its core business – platform e-commerce business and the rapid growth of its cloud computing business.
According to the China Academy of ICT, the overall market size of cloud computing in China reached 133.4 billion yuan in 2019, up 38.6% year-on-year. Among them, the public cloud market size reached 68.9 billion yuan, up 57.6% year-on-year. It is expected that the overall market size of cloud computing in China will still be in a rapid growth phase in 2020-2022, and the market size will exceed 230 billion yuan by 2023.
Charlie Munger staged a precise plunge after the negative out, Alibaba really the return of the king?
From the development of the domestic cloud computing industry, China’s cloud computing industry penetration rate is still a large space to improve. On the one hand, compared with the global cloud computing industry, China’s 2019 cloud computing penetration rate is 4.51%, while the global penetration rate has reached 9.51% during the same period, with global cloud computing as the anchor, China’s cloud computing penetration rate to improve the space of at least one times more.
According to the data of China ICT Institute, in 2019, China’s cloud computing market accounted for about 10.3% of the global, while China’s GDP accounted for 16% of the global, therefore, China’s cloud computing market is far from the industry capacity share of China’s economy in the global economy should be, the future of China’s cloud computing industry capacity share will be further enhanced.
Charlie Munger staged a precise plunge after the bearishness was out, Alibaba really the return of the king?
From the industry competition pattern, the industry Top3 head players share of CR3 has reached 70%, the entire Chinese cloud computing industry is basically the world of BAT three giants, of which, BAT three, Ali cloud computing accounted for 46%, more than Baidu Tencent combined, the entire Chinese cloud computing half of the sky has been occupied by Ali cloud.
Charlie Munger staged a precise plunge after the shortfall, Alibaba really the return of the king?
In recent years, the pursuit of new incremental users has become the focus of Ali’s business layout, and the sink market is obviously an important consideration for the outside world to test Ali’s expansion of its borders to tap incremental value.
The sink market has become a new growth pole for e-commerce, and the major giants are showing their skills
In the first two mobile Internet user scale significantly slowed down at the moment, Ali, Jingdong in the number of users in the growth of weak, the growth of the wind by the momentum of the sink market overshadowed by Jindo.
Charlie Munger staged a precise plunge after the shortcomings, Alibaba really return of the king?
In the face of the sink market has become a new growth pole for e-commerce users, the major giants naturally will not let go of this new growth point. According to the Ministry of Commerce’s China Retail Industry Development Report and data released by the Bureau of Statistics, rural network retail sales have maintained growth for five consecutive years since 2014, and the proportion of the overall online retail sales has been increasing, reaching 16% in 2019.
Charlie Munger staged a precise plunge after the bearishness was out, Alibaba really the return of the king?
The development process of anything cannot be smooth, and even as China’s top technology company, Alibaba still can’t escape the fate of a big tree attracting wind.
First, the world’s largest IPO of Ants Gold was suddenly called off the night before the listing, or in the lower market also encountered strong sniping of Pindo, the recent Alibaba can be described as a bad year.
The company’s main business is to provide a platform for the development of a new product. The company has been abandoned by the Amoy system of e-commerce in the sinking battlefield, invincible.
In the fourth quarter of 2020, the number of multi-year active buyers has reached 788 million, surpassing Ali for the first time to become the first in China’s e-commerce industry.
Charlie Munger staged a precise plunge after the shortcomings, Alibaba really the return of the king?
Once, how the Amoy system of e-commerce to defeat offline clothing stalls, offline department stores, today Poundland will be the same law to occupy the low-end online retail. In the retail industry, whether online or offline, efficiency and cost is the eternal theme of industry development and change, whether it is now or in the future.
However, it is not too late to mend the fold, the Amoy system of e-commerce painful to reflect on the neglect and stripping of the lower end of the lower market, in March 2020 Ali online Taobao special version to start the C2M strategy to benchmark Poundland, began to face hard, in order to regain lost ground. Ali 2021Q2 financial report shows that in September 2020 Taobao special version of the monthly live number of people has exceeded 70 million, after all, is a low consumption of the lower market, the user viscosity is naturally not compared to the high-end prefer brand consumption of the crowd, as long as cheap, complete variety can be harvested sink users, for Ali, to regain the year when the starting watchword is not a difficult task.
Charlie Munger after the shortcomings out of the play a precise bottom, Alibaba is really the return of the king?
Jingdong is a comprehensive implementation of the sinking strategy, online through the main station Jingdong seconds + Jingxi double wheel drive, offline through the Jingdong home appliance stores, Jingdong convenience stores and other businesses to penetrate, but also more down market for active warehousing logistics layout, after all, compared with Ali Pindo, traffic, category is not its advantage, logistics is Jingdong’s masterpiece.
Relying on the user base and shopping habits of WeChat, Jingxi WeChat small program through the “group purchase + distribution fission” to attract more consumers. At the same time, the first-level entrance of Jingxi home page can directly jump to the main site of Jingdong, low cost diversion for the main site, as of March 2020, the number of monthly active users of Jingxi applet is close to 150 million.
Charlie Munger staged a precise plunge after the negative out, Alibaba really the return of the king?
Where there is growth, where there is value.
With its leading position in e-commerce and cloud computing, Alibaba will remain at the forefront of China’s rapid economic growth and will remain one of the most valuable Chinese stocks in the technology sector.
Where there is undervaluation, there is opportunity.
If Alibaba hadn’t suffered a recent setback and a bearish market, how could value investment guru Charlie Munger have had the opportunity to take advantage of the “golden pit” to plunge to the bottom?
That’s why it’s only natural that Alibaba, which has value and growth, is being invested in by its stock god partner Charlie Munger.
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