Tags: Peter Cohan | Alibaba | global appeal | stock

Venture Capitalist Cohan: Alibaba 'Lacks Global Appeal' Despite the Hype

By    |   Sunday, 21 September 2014 05:36 PM

While investors fell head over heels for Chinese Internet titan Alibaba, boosting its share price 38 percent after the initial public offering Friday, venture capitalist/management consultant Peter Cohan, finds the company lacking in several ways.

The shortcomings would lead Mr. Glotz, a fictional character created by Berkshire Hathaway Vice Chairman Charlie Munger and modeled after his colleague Warren Buffett, to stay away from the stock, Cohan argues on Forbes.com.

First, "It lacks global appeal," he writes. While Alibaba is thriving in China, it has a long way to go before it can compete in other countries against their own Internet giants, such as Amazon in the United States, Cohan says.

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And Alibaba may have difficulty replicating what it has accomplished in China elsewhere, he writes. "Its business model is not hard to copy outside China," Cohan says. "And in markets where government connections are not so important, others may be able to copy what it does."

Bottom line: "Mr. Glotz’ reservations should put your urge to buy its shares on hold," Cohan writes.

Mark Hulbert, publisher of Hulbert Financial Digest, agrees that investors should think long and hard before jumping in to Alibaba shares.

Many Chinese companies have experienced financial scandals, he notes on MarketWatch. "We can’t rely on the financial, legal and regulatory safeguards in China that we take for granted in the U.S."

Also, it's difficult to know whether the stock market as a whole can continue its five-year rally.
"Asking hard questions is important at any time, of course, but it’s especially true now with the stock market at an all-time high and the IPO market overheated," Hulbert writes.

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While investors fell head over heels for Chinese Internet titan Alibaba, boosting its share price 38 percent after the initial public offering Friday, venture capitalist/management consultant Peter Cohan, finds the company lacking in several ways.
Peter Cohan, Alibaba, global appeal, stock
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2014-36-21
Sunday, 21 September 2014 05:36 PM
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