Alibaba, Aspermont, Facebook - Cyberattacks or data leaks?

Alibaba - Completely out of step

The Alibaba share price starts October as September ended: with a new low. The Hang Seng China Enterprises Index has even fallen to a new five-year low. The current downtrend remains bearish for China stocks - and there is little hope for improvement right now, as major markets in the US are also sputtering. Why has Alibaba stock gone completely off the rails?

A political issue is palpable: Chinese fighter jets recently violated the neutral zone with Taiwan. Probably another provocation. Plus all the other negative, or at least negatively interpreted by investors, developments related to the overbearing regulator. The Chinese leadership demands more transparency from Alibaba & Co. and the will to make the enormously increased shareholder wealth accessible to the people. Typical thinking, which we have been hearing from the Middle Kingdom for years.

At present, no one has any desire to buy into this situation anymore. The charts of the Internet giants are pointing downward, and no one expects a short-term change. Soon it will be the first anniversary that the IPO of the fintech Ant was stopped on the last meters by the Chinese government. In turn, this began a chapter that has been anything but positive for many tech players. Looking at the Alibaba share and Ant Financial, we can now say: It is about more than just the subsidiary. It is now or never!

The relative weakness of the stock to the entire US tech sector is nevertheless striking. The downward trend is now brutal, not least in its persistence. The new low in October is EUR 119, the all-time high at EUR 270 is thus already 56% away. Our advice: do not buy the breakout of the downtrend until it becomes significant at 5-10%.

Aspermont Ltd. - Capital market services made in Australia

To discover a sophisticated media service model, it is worth looking to Australia. There, there is Aspermont Ltd, a media and fintech Company in one. Its core business is quite old and includes publishing the two longest-serving regular publications for the mining sector, namely Mining Journal and Mining Magazine. Both print publications date back to the last millennium in their inception and serve an extensive readership.

Starting in 2015, the business model changed very much towards digital and the stock market. Part of this strategy is the recent entry into the FinTech sector. The Australians announced the launch of a platform to raise capital for savvy investors in cooperation with Spark Plus Ltd, a consultancy and specialist in roadshows for Asian companies with offices in Singapore and Tokyo, and International Pacific Capital, a Sydney-based securities dealer established in 1987.

Before entering the capital brokerage business, Aspermont built a 7.5 million-user database and XaaS (Anything-as-a-Service) model. The service was aimed at decision-makers, especially in the commodities industry. In 2020, the new Virtual Event & Exhibition (VEE) division was launched. At its launch, Aspermont acquired over 100 new business customers, including high-profile companies such as Dassault, Hexagon, S&P, Olympus, SAP and Honeywell. The strategy was to not only attract these companies for one or more virtual events but to retain them for the long term through bundling and cross-selling.

After these years of major investments, Aspermont is now slowly entering the harvesting phase. The Company is currently operating with a gross margin of over 60% and was able to generate a profit of more than AUD 2 million in the last quarter. The cash flows continuously increase because a certain catch-up effect in public relations can be felt after the long corona breaks. In addition, there is now also income from financial transactions with companies seeking capital. With a constantly growing user base, the relevance of the information services offered and the number of transactions increases. The earnings potential becomes more dynamic with each new customer, as the cost base does not rise accordingly.

The share price has moved sideways in the range of AUD 0.024 and AUD 0.028 in recent weeks. In Germany, up to 10 million shares are circulating per day in some cases. The story is becoming more widely known, and many new investors are jumping on the bandwagon.

Facebook - Failures cost not only money but many customers

Once again, Facebook is making news with gross IT problems. The massive outage of all Facebook services earlier this week is disturbing and shows the vulnerability of public platforms. What happened? A technician had shut down the backbone network with a simple command, and a responsible gate software ultimately failed to prevent it. Facebook's technicians were reportedly barred from using special tools that could have fixed the bug itself, and remote access was also no longer possible.

This renewed blackout in the Zuckerberg Group should not be dismissed so easily because, on the one hand, Facebook customers are losing more and more trust in the Group due to the many offline times. On the other hand, Facebook is no longer alone with its services. According to market surveys, the Group has suffered massive losses on the member side due to the threat of fees and non-compliance with European DSGVO standards, especially with messenger services. Although advertising revenues are still rising at Facebook, customer growth has fallen dramatically. In the first wave in mid-2021, over 25 million WhatsApp users switched to Telegram in one week. That could happen again.

After the incident, Facebook's stock has lost nearly 6%, or about USD 55 billion, in market capitalization. Still, the share is not even "expensive," as Facebook is growing at 30% p.a. and is valued at a P/E ratio of 24. Nevertheless, the price should not fall below USD 315 in the current chart; otherwise, the sell-off will accelerate. Caution is therefore advised for bulls.

Companies that do business with customer data have mushroomed in recent years. Facebook and Alibaba are two typical Big Data corporations that do not operate very transparently but very successfully for their investors. Aspermont Ltd. operates in a niche market for investors and companies alike. The crux lies in the linking of media services with the financing possibilities of the capital markets.