👀 Why I’m Watching BABA While Everyone Bails

🌞Good Monday Morning, Folks!

The market has a short memory — and an even shorter attention span.

Alibaba dropped strong earnings back in February, juiced margins, flexed buybacks, and then… nothing. The stock flatlined. Not because the business got worse, but because investors got bored. That’s how this game works: if there’s no meme, no momentum, no Morgan Stanley upgrade, most people just stop caring.

But boredom? That’s where mispricing hides. And right now, Alibaba is the kind of setup that tests your patience before it rewards your discipline. It’s not sexy, it’s not fast, but it’s quietly compressing — while the cash flow keeps rolling and the share count keeps shrinking.

In today’s newsletter, I’m pulling apart the emotional setup most investors are missing — and why this current fatigue around BABA might be the signal, not the noise. No drama. No hype. Just a slow burn turning into pressure. Let’s dig in.

TOGETHER WITH OUR PARTNER

Marketing ideas for marketers who hate boring

The best marketing ideas come from marketers who live it.

That’s what this newsletter delivers.

The Marketing Millennials is a look inside what’s working right now for other marketers. No theory. No fluff. Just real insights and ideas you can actually use—from marketers who’ve been there, done that, and are sharing the playbook.

Every newsletter is written by Daniel Murray, a marketer obsessed with what goes into great marketing. Expect fresh takes, hot topics, and the kind of stuff you’ll want to steal for your next campaign.

Because marketing shouldn’t feel like guesswork. And you shouldn’t have to dig for the good stuff.

Sign Up Free

💡One Big Idea: BABA’s Shakeout Is the Launchpad -If You See It Right

Everyone loves buying when things are down.

But few are bold enough to actually pull the trigger when the market is pressed on China risk—and that’s the moment real opportunity shows up.

Take Alibaba (BABA). As of July 12, 2025, it's trading around $106.70, down sharply from its post-earnings jump back in February. Instead of focusing on that pullback, I see something else: compression. And compression often leads to a breakout—if you’ve got the nerve to stick around.

Here’s why I’m taking this setup seriously—even with headlines shouting China weakness.

Skip the Drama - Look at the Numbers That Matter

On February 20, 2025, BABA reported Q3 FY2025 (December quarter) results. The market’s loudest messages were: headlines-centric number references. But let's break down the core figures:

1. Revenue: RMB 280.15 billion (~$38.6 billion), +7.6% YoY — marginal beat on consensus, fueled by strong year-end spending, Singles’ Day momentum, and international e‑commerce strength

2. EPS (Non-GAAP): $2.93 per ADS, topping estimates by ~10%

3. Cloud Intelligence: Up 13% YoY—reflecting growing AI and enterprise demand, even with aggressive reinvestment

4. International Commerce (AliExpress, Lazada): Surging 32% YoY, showing global e‑commerce strength

5. Share Buybacks: ~$12.5 billion in the past year, shrinking shares by ~5.1% YoY

6. Free Cash Flow: $23 billion TTM, maintaining fortress-level liquidity

7. Margins & Discipline: Adjusted EBITA margins remain in the mid-teens, signaling efficient operations even as investment ramps

Yet after all that, shares rallied ~14% on earnings day and then pulled back into the summer, erasing gains. Sounds like contradiction but noise often masks structure.

What the Market Missed (and What I’m Watching)

The narrative is predictably bearish: macro concerns, China slowdown, and a $52B AI/cloud investment plan (announced Feb 24) that spooked investors.

But that headline misses context:

• AI/cloud investment is a multi-year bet - 380b RMB (~$52B) over three years - lifting long-term optionality, not signaling distress

• Ambitious, not irrational: That spend exceeds Alibaba’s last decade of investment. Smart money sees it as discipline, not desperation

• Options data suggests volatility but not collapse: Post-earnings, BABA dipped only about 6%, roughly in line with expectations

• Institutional whisperers are returning: Reports of Ryan Cohen building a ~$1B stake added momentum in February but faded into summer pain

The Pain is Intentional Compression

Here’s what matters:

• Shares are compressing between $105 - $115 - the range widens when institutional sentiment is shaken.

• China weakness narratives dominate - but Alibaba itself is delivering beneath the noise.

• Quick-fix traders sold into strength; long-term holders aren’t stepping in yet.

That’s textbook compression: fundamentals strengthening while the market ignores it. The next move is often sharp and surprise. The question isn’t “Will it go up?” It’s “When and how hard?”

Digging Into the Core Engines

1. Domestic Commerce (Taobao & Tmall)

• Revenue grew ~5% YoY in Q3, sustaining along with disciplined Pinduoduo competition

• Singles’ Day momentum rolled into strong end-of-year sales, showing brand resilience

2. Cloud Intelligence

• +13% YoY in Q3- AI services are driving adoption, not just traditional cloud

• There's real momentum beyond infrastructure - platforms, enterprise tools, and AI models matter more

3. International Commerce

• +32% YoY - AliExpress and Lazada pushing into new regions, especially Europe and LATAM

• Tariff clouds? Possibly a headwind, but growth proves resilience

4. Logistics & Cainiao Expansion

• Cainiao growth surged; IPO remains a potential catalyst

5. Corporate Discipline & Buybacks

• $12.5B returned; share count down 5%

• Margin discipline holds despite heavy investment

6. Capital Allocation for AI & Cloud

• $52B plan is bold but investors are starting to see it as anchor for global AI ambitions, not a cash burn panic

The Behavioral Advantage: Where Others Get It Wrong

This is where edge lives:

• Most investors anchor on headlines: China slowdown, macro risk. They didn’t build for strength to show through. That’s your chance.

• They expect breakout when they want it - rarely when it’s due. Alibaba is strengthening quietly. Big moves happen during base breakouts, not parabolics.

• FOMO sets in once it’s obvious. That’s how rallies happen. Be willing to dive in before the crowd, not after.

The Checklist: What I’m Tracking Now

I don’t chase blind. I watch specific triggers:

1. China composite PMI & retail data: A confirmed macro stabilization would reduce narrative noise.

2. Next AI/cloud earnings cadence: Are revenues accelerating? Are margins maintaining?

3. Share count updates: Another quarterly 1 – 2% reduction sends a clear shareholder-alignment message.

4. Institutional accumulation: Continued stake-building from notable funds or investors is a signal of conviction.

5. Options skew & implied volatility: Sharp drop in IV suggests market is ready for a move.

Your Strategic Calibration

This isn’t a “back the truck up” moment. It’s a filtering moment:

• Buy into discipline, not hype. Alibaba is refocused - 6-unit structure, cash machine, margin discipline, global expansion.

• Be clarity-first investor. Understand what needs to happen to validate your thesis and track it.

• Smile during pain. If BABA stays range-bound while corporate actions continue, that pain becomes a brilliant entry point.

Here’s what separates a strategist from a commentator: knowing pain builds optionality -not always breaking your spirit.

🧠 Ain’t Broken

Alibaba isn’t broken. It’s compressed. It’s executing. And it’s ugly on the surface but value doesn’t need prettiness to amplify quickly.

Smart investing isn’t about reaction. It’s about conviction in the uncomfortable zones. BABA right now is one of those zones.

Pain is a feature, not a bug—if you understand why it exists.

🧠 Final Thought

The hardest part of investing isn’t figuring out what to buy. It’s standing still when the story looks cloudy but the foundation is solid. Alibaba is testing that discipline right now — not with drama, but with dullness. And that’s exactly when the best setups are forged. The more a stock drifts sideways while the fundamentals quietly improve, the more explosive the move tends to be when sentiment finally catches up.

What I’ve learned over time is this: the market rewards clarity, but it punishes urgency. You don’t need to predict the bottom — you just need to know when the discomfort is worth enduring. Not everything unloved is broken. Some things are just early. And in this game, being early with patience beats being late with comfort.