Valuation Analysis of Alibaba Using P/E, P/B, and EV/EBITDA Models

Abstract

Background: As a leading enterprise in China’s internet industry, Alibaba Group Holding Limited holds significant reference value for investors, competitors, and academic researchers in terms of valuation analysis. This study aims to evaluate its intrinsic value and assess the rationality of market pricing through multiple relative valuation models. Methods: This study selects Tencent Holdings, JD.com, and Meituan as comparable companies. It applies three trading multiples within the relative valuation framework—Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value to EBITDA (EV/EBITDA)—to conduct a comprehensive valuation analysis of Alibaba for fiscal year 2025 and the forecast period. Results: The analysis indicates that among the three models, EV/EBITDA demonstrates the highest applicability for valuing Alibaba in fiscal year 2025, as it is not affected by capital structure, non-operating income, or substantial capital expenditures. The P/E ratio exhibits reduced reliability due to distortions in net profit, while the P/B ratio shows the lowest applicability because Alibaba’s core value lies in its asset-light structure and platform ecosystem, which are not well aligned with the assumptions of this model. Conclusion: The findings emphasize that the selection of valuation methods should be based on a firm’s specific operating conditions and financial characteristics at a given stage.