The Value of a Company




I have been holding shares of Alibaba since December, 2020; Amazon, since February, 2021.


Bought both at a deep discount of about 30% off.


It is now June of 2021, months later.


Baba is still flat, and Amazon made like a 4% gain.


Why didn't I just discard them, and buy a better stock?


Let's look at each of these stocks.


Alibaba, being the top e-commerce giant of china, grow at a rate of 30%(profit) or more each year.


For the year 2020 alone, it enjoyed a profit of about 32 billion dollars(USD) for it dominance in the e-com market. but its price is still at a 30% discount! flat since December 2020.


Amazon, being the American version of Alibaba. The top e-com giant of the world, with a huge market cap of 1.7 trillion dollars. Second only to Apple Inc in terms of market cap.


Being the employer of more than 1 million people, Amazon rolls in 27% profit each year. For the year of 2020, it made 94 billion dollars in profit.


On February 2021, it traded at a 30% discounted rate of $3080.


Now it is June 2, 2021... it is still trading at around this level.


What is going on here?


These 2 companies are obviously highly profitable company, and they obviously are great companies. Why aren't they more popular? and most importantly, why is the share price so low?


Are the money they made each year fake? Are the profit they made each year a forgery?


No, this is the magic of Mr. Market.


Mr. Market, the value investor's personal Leprechaun!

Mr. Market only brings money to those who are patient investors.


From time to time, Mr. Market would bring you some great companies at an incredible price!


If you are like me, a value investor, and capable of seeing the value in these stocks, it is quite easy to make a fortune!


But Mr. Market doesn't just bring money to everyone! He only brings money to those who can wait patiently for the stock price to catch up to the value of the company.


The price of a stock such as Baba and Amazon can stay like this for 1, 2, or even 3 years! The arrival of the price matching its value can only be delayed, but never absent!


Human nature, when they're optimistic, they can be extremely optimistic and push a stock way pass it's fair price.


When they're pessimistic, they can make a stock go way below it's value.


The reason both stock's price is so low is because they're not sexy!


I'm not saying it in a sexual way of course, it's a metaphor.


They're not a hot stock! They don't grow 30%, 50% or 100% overnight.


We don't see news of people holding Amazon.com's stock and got rich overnight.


Most of us, if you like to admit, love to speculate.


We want high risk, and high reward.


Stocks like BABA / Amazon is not going to get you rich overnight.


But as a value investor, I sure love them to hell...


A value investor's job is to see value, buy value, and wait for the price to return to its fair price.


These companies are the ideal value investor's paradise! How could I say no!?




(These are just my personal opinions of these stocks, it is not a signal to buy.)


For your reference only!


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