For those who follow Alibaba, there is always a number of stories related to the company, most of them speaking of how the company is investing into another branch of the market. However, the recent news surrounding Alibaba is sparking numerous worries, and even has Alibaba making a response publicly to what has been said, something which is rare.
Alibaba is known for marking the largest initial public offering in all of history, thus financial questions and stories surrounding Alibaba are always something the company hears. However, the latest rumor is one that has many people running for higher ground, thinking that Alibaba is a sinking ship.
Learn how Alibaba is expanding in China here
A story that appeared on Barron’s is claiming that Alibaba is set to fall around 50% of further down in the market, making many investors and those who follow the market hesitant and nervous. The article on Barron’s highlighted several instances in which Alibaba seems to be joining the ranks of other large corporations who have failed in China, along with pointing out the flaws of the company. For example:
- Comparing the PE multiple of Alibaba to eBay, who is no longer a big market player in China anymore
- The loss of market share, which Alibaba argues is not accurate information in which the website has listed
- The article even claimed that customers were not spending as much money on Alibaba platforms as they were with other retail spending
Needless to say, many people are worried that the accusations that are found within the Barron’s article is something in which they need to watch out for.
Alibaba Responds to Barron’s
Due to the number of people who have expressed their interest in this topic, fearing the worse for Alibaba, the company has made their position known and took many of the points, clarifying these. The letter was written by Jim Wilkinson, the senior vice president for International Corporate Affairs to the editor of Barron’s. In the letter, Wilkinson starts by writing:
“Your September 12 article with the sensational headline “Alibaba: Why It Could Fall 50% further” lacks three key ingredients – integrity, professionalism and fair play.”
Wilkinson pointed out several more flaws with the Barron’s article. He also wrote:
“Mr. Laing [the article author]attempts to question Alibaba’s reported financials and operating metrics…First, Alibaba stands by our reported financials and operating metrics. Alibaba reported 367 million active buyers for the twelve months ended June 20, 2015…”
It is clear that Alibaba is more than upset by this article that calls into questions the business practices and ethics of Alibaba. In addition, it did a great job of making many people start to doubt the success that Alibaba is expecting to have in the market. The entire response letter from Alibaba can be read here.
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What this shows to the entire world, is that Alibaba knows how to deal with criticism towards their brand. It also showcases how brands must be translucent when it comes to their financials so they can avoid rumors associated with their company. Alibaba stood up for themselves in a polite and educational manner, something that will stick out to the number consumers who read their response.