The Alibaba stock price has dropped 13.6% in the last month and is now down nearly 35% in 2015.
Today (Monday), shares of Alibaba Group Holding Ltd. (NYSE: BABA) were trading just above $67, meaning BABA stock is now below its $68 IPO price.
While many investors are worried about the Alibaba stock price, this is actually an excellent time to buy BABA shares. You see, Alibaba shares have been the subject of serious market overreaction.
Investors around the world are worried about the Chinese economy and are selling shares of Chinese companies at an alarming rate.
Shares of Alibaba's competitor JD.com (Nasdaq: JD) have performed even worse lately, down 21% in the last month. Baidu Inc. (Nasdaq: BIDU), the "Google of China," has seen its stock drop 13.3% in the last month. The "Twitter of China," Weibo Corp. (Nasdaq: WB), has posted a loss of 12.5% in August.
Regardless of the company's performance, investors are selling Chinese stocks in a panic.
That is especially true with Alibaba stock. In Alibaba's last earnings report on Aug. 12, the company reported an earnings beat and revenue growth of 28%. They also reported year-to-date profits of $4.97 billion, which was up 148% year to date.
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.
And those growth numbers are just one of the reasons we're bullish on Alibaba stock now.
Why We're Bullish on the Alibaba Stock Price Long Term
According to Money Morning Executive Editor Bill Patalon, BABA stock is one of the best long-term investments on the market...
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"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."
The Chinese economy may be causing stress among U.S. investors, but China's Internet industry is actually growing at an incredible rate.
"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."
"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 short-term volatility.
"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."
We likely won't see the Alibaba stock price dip much lower than it already has. At $67 a share, BABA stock is trading at a discount.
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