TL;DR
Some investors mistook a struggling stock (BABA) for a hidden gem, ignoring the broader context of its decline and mimicking the risky behavior of meme-stock mania. This selective optimism, often seen during speculative bubbles, hides inherent dangers.
Story
Imagine betting your house on a horse everyone else says is lame. That’s essentially what some investors did with Alibaba (BABA) in 2023-2024. They saw sinking prices as a “discount,” ignoring flashing red flags. The narrative? US media “bashed” Chinese stocks, creating a buying opportunity. Sounds like the classic “they’re just scared” pump from meme-stock mania, doesn’t it?
Here’s the rub: BABA didn’t magically rebound in 2024. The euphoria in the original post is misleading, focusing solely on an upswing after a prolonged slump. This conveniently ignores that BABA had crashed from much higher prices. It’s like celebrating crawling out of a ditch when you fell from a skyscraper.
‣ Meme-stock mania: Amateur traders coordinating online inflate failing companies, creating artificial bubbles.
This isn’t financial advice, but a healthy dose of skepticism is always warranted. Remember 2008? Enron? Blind faith rarely pays. Before diving into any “bargain,” ask yourself: what are others missing that I am? Often, the answer is: a whole lot of risk.
The image celebrating the “comeback” shows someone holding BABA from $72/share to ~$90. This ignores the fact that BABA had traded above $300 in previous years. This cherry-picked timeframe hides the broader context of massive losses.
‣ Cherry-picking: Selectively showing data to support a narrative while hiding unfavorable information.
Advice
Due diligence is your shield. Don’t rely on hype or cherry-picked data. Research a company’s entire history, not just a convenient snapshot. If something looks like a falling knife, maybe it is.