$BABA (Alibaba) shares traded up 3.25% to $103.29. It has a market cap of $249bn. It's annual revenues for 12 m/e 31 march 2014 was 52.504bm CNY (8.45b USD). That gives it a PSR of around 30. Doesn't it occur to investors that a $249nb company cannot legitimately grow at rates which justify a price to sales ratio of 30?
Revenues were 11.9bn CNY for 12m/e 31 march 2011. That's an annualised growth rate of 64%. Has no-one reflected on the sheer improbability of this for such a large company?
Alibaba is a China-based online and mobile commerce company. Valuewalk recently posted an article ( http://bit.ly/1yMZ2vj ) saying that BABA was in talks to buy a stake in an insurer. Why is an e-commerce website buying an insurance website? It's a rhetorical question. The answer is: none at all. All other answers are wrong.
Investors are going to get burned. Badly. There is no other possible outcome. If I were Yahoo, I'd start offloading.
What we are seeing here is the utter insanity of crowds.
$103.29
