The Alibaba stock price was down as much as 8.2% today after the Chinese e-commerce company had a weak earnings report. Shortly after the opening bell, Alibaba Group Holding Ltd. (NYSE: BABA) hit an all-time low of $71.03 per share.
Investors were disappointed with Alibaba's revenue figures. Alibaba reported revenue of $3.26 billion for the quarter, which missed estimates of $3.39 billion.
While revenue was a letdown, earnings per share (EPS) beat. EPS was reported as $0.59, which topped estimates of $0.58. And sales still grew an impressive 28% in the quarter.
That wasn't the only bullish figure...
Profit grew an impressive 148% to $4.97 billion year to date. The company also reported gross merchandise volume jumped 34% in the quarter. The number of annual active buyers increased 32%.
Mobile figures, which have become some of the most important metrics for the company, were also impressive. Mobile transactions now account for 55% of Alibaba's total transactions. That was up from 51% last quarter and 33% last year.
Alibaba now has 307 million mobile users. That's up 63% from last year, and it's almost equal to the entire population of the United States.
Company officials also announced they have authorized a $4 billion share buyback program.
At today's low, BABA stock is down more than 30% year to date. The Alibaba stock price has fallen 40.8% from the high of $120 it hit in November 2014.
So why is Alibaba stock falling when most of the numbers are bullish?
Why the Alibaba Stock Price Is Down, and Why It's Still a Buy Now
The problem is two-pronged...
First, after the largest IPO in history, the expectations for Alibaba are incredibly high. They're also unrealistic. Alibaba is growing revenue at 28% and investors are disappointed.
Second, investors around the world are worried about the Chinese market. In the last two months, the Shanghai Stock Exchange Composite Index has fallen roughly 25%. This week's news that China has devalued its yuan currency also sent panic through the global markets.
As a result, Chinese stocks have been hammered. Internet giant Baidu Inc. (Nasdaq: BIDU) has fallen 30% year to date. JD.com Inc. (Nasdaq: JD) has seen its share price crater 29% since mid-June.
And while many are panicking, this is actually an excellent time to buy Alibaba stock at a discounted price. According to Money Morning Executive Editor Bill Patalon, BABA stock is one of the best long-term investments on the market...
"This company has market power, a visionary leader, and it's making smart decisions," Patalon explained. "They're trying to build something special. A paradigm-shifting, rule-breaking company. They're trying to create new ways of doing things."
Investors may be panicking about the Chinese economy, but the Chinese Internet industry is absolutely booming.
A recent study by the China Internet Network Information Center (CNNIC) determined the number of Internet users in the country will hit 800 million by 2016 or sooner. By comparison, the entire current population of the United States is just 319 million.
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"Alibaba is gaining traction in its home market in China just as that country's people are truly joining the Internet revolution," Money Morning Defense & Tech Specialist Michael A. Robinson said. "And the development of easy-to-use mobile commerce is giving Alibaba a strong tailwind."
According to Robinson, Alibaba "could be the single-greatest wealth opportunity of our lifetime."
"What you have to look at is the long-term potential, which is still huge," Patalon said. "They still haven't even maxed out their own market. They're bringing in entertainment companies and new business-to-business ventures. They're going to keep expanding their offerings."
That's why Patalon urges investors to look past quarterly Alibaba earnings reports.
"This isn't just a stock to buy for 2015," he explained. "This is a great investment for years to come. If you invest money that you can afford to lose and hold onto the stock for several years, you'll end up being very surprised by how much you've made."
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