What is the Fair Theoretical Value of Alibaba Group Holding Limited (Alibaba)?

Ieva Lukoseviciute

Student thesis: Master thesis

Abstract

By using theories from finance and strategic management, this Master thesis has evaluated the fair theoretical value of Alibaba Group Holding Limited stock. The 10-year forecast was made based on an analysis of country, industry and company strategies. The analysis of the country was made according to the PESTLE framework, while Porter’s 5 forces analysis was made on selected industries. Due to the global nature of the digital conglomerate, country analysis is supplemented with global factors, while the global ecommerce and cloud computing industries were enhanced with factors from China. The business model and strategy were analysed using a combination of Aggregator theory and the theory of Network externalities. Findings show that integrated, data-driven ecosystems can reinforce core business due to synergies and network effects. EVA model was used to evaluate enterprise value and consequently the fair stock price, which was $185.53, while it was traded for $182.45 on the 1rst of April 2019. Since the stock was traded at a lower price the suggestion for an investor would be to buy the stock. However, the decision depends on individual risk preferences and beliefs.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages77
SupervisorsOle Sørensen