Alibaba has responded to Barron’s damning cover story published on Sunday. Jonathan Laing of Barron’s forecasts that the Chinese e-commerce giant’s stock could tumble as much as 50%. Alibaba said Barron’s cover story lacked “integrity, professionalism and fair play.” Citing Chinese research firm JCapital Research, Laing had also suggested that Alibaba’s numbers were unverifiable.

 

Barron’s story is misleading, says Alibaba

Laing compared the Hangzhou-based company’s valuations to that of eBay because both are e-commerce players that connect buyers and sellers without taking any inventories. He said Alibaba traded at 25x the consensus earnings estimate “for the year ahead.” In its response, Alibaba pointed out that the “year ahead” should mean 2016, but Laing cited 25x PE multiple on analysts’ 2015 consensus earnings.

That’s misleading, said Jim Wilkinson, the company’s SVP of international corporate affairs. If Laing was referring to the “year ahead” (2016), then Alibaba’s PE multiple on analysts’ 2016 consensus earnings is 20x. Wilkinson added that Alibaba should be compared to Tencent and Baidu rather than eBay. Laing also cited rising competition between Alibaba and JD.com, which is eating into the market share of Tmall.

Laing also questioned Alibaba’s numbers. He said Alibaba claims to have 367 million users. Based on the company GMV in the last 12 months, an average user spent $1,215 on Alibaba’s websites. That’s 26% higher than the $963 annual average for the U.S. online shoppers. But the U.S. is richer and more developed, and its per capita GDP is 7.5 times that of China. So, how can Chinese consumers spend more online than their U.S. counterparts?

Alibaba said the Barron’s story overestimated the average annual spend per user in China, while keeping the U.S. numbers dramatically low. The company’s own calculations suggest that the average annual spend per user in China was $1,056 rather than Laing’s figure of $1,215. And an average American online shopper spent $1,665 last year. By Alibaba’s calculation, Chinese users spend only 37% less than Americans.

Laing questions the actions of Alibaba founder

The Barron’s piece also questioned founder Jack Ma’s actions. Ma “quietly transferred” the ownership of mobile payment platform Alipay out of Alibaba, and into a separate private firm controlled by Ma. It deprives Alibaba of Alipay’s earnings. The Hangzhou-based company said it was done to meet licensing requirements in China, which mandates that non-banking payment processors should be domestically owned. That explanation was “somewhat flimsy” because Alipay was domestically owned before as well as after the transfer.

Alibaba shares fell 2.82% to $62.85 in pre-market trading Monday.