Open Says Me Again... please...

(Bloomberg) -- Alibaba Group Holding Ltd. looked like a sure thing a year ago when it pulled off the largest initial public offering ever. It had a lock on China e-commerce as the economy was surging and consumer spending was steadily rising. Shares soared 76 percent from the IPO price in just two months.

Then it all crumbled. Alibaba came under fire from a China government agency, it cut deals that baffled investors and it replaced its chief executive as growth slowed. Most important, China’s economy turned wobbly, jeopardizing the rise in consumer spending Alibaba needed. Its stock slid down, down, down to the IPO price and then below. The sure thing was no such thing.

What now? Investors who watched $128 billion in market value disappear shouldn’t expect a reprieve any time soon. Atlantic Equities LLP’s James Cordwell, the top-ranked analyst covering the stock, predicts the slowing Chinese economy will undercut e-commerce transaction growth until at least 2016. The many deals Alibaba has negotiated will take time to pay off too.

“All the operating metrics seem to be pointing in the wrong direction,” said London-based Cordwell, who topped Bloomberg Absolute Return rankings for his calls on Alibaba and also recommendations across the portfolio he covers. “Until investors feel some comfort in that slowdown bottoming out, it will be hard for the stock.”

Jack Ma, Alibaba’s chairman and co-founder, isn’t known for coddling investors. In a letter with the IPO filing, he said explicitly shareholders would be the third priority after customers and employees. He and his partners didn’t want short- term market volatility to distract from building a successful business for the long term.

Indeed, many of Alibaba’s troubles derive from a domestic economy over which it has no control. While conceding some missteps in its first year, Alibaba isn’t one for introspection.

“We don’t think about events backward looking, we try to look forward,” Vice Chairman Joseph Tsai said in an interview. “We have made our mistakes and we learned from them.”    Read More: