This month, a disappointing earnings release re-initiated th...

This month, a disappointing earnings release re-initiated the selloff in Alibaba Group (BABA) stock. Revenue was just barely off analyst estimates, while earnings missed by a wide margin. The release showed that BABA's tax rate had increased to 25% and its revenue growth had slowed to 29%. The numbers were disappointing but not devastating to the long term thesis on BABA. Enough revenue growth can absorb the impact of increased costs, but BABA's costs - especially taxes - increased more than many had anticipated in Q2. The tax burden alone was nearly a billion dollars, and the company rolled increasing amounts of money into its still-unprofitable non-core businesses. It will take some time for BABA to walk off these higher costs.

BABA stock remains risky. Between fines, new regulations and economic tension between China and US, there are many risk factors for investors to be aware of. Just recently, BABA and a few of its competitors got slapped with another round of $78,000 fines - this time for not reporting transactions. The amount of money in this case was negligible, but the event showed that Chinese internet companies still face a lot of scrutiny from the Chinese Communist Party ("CCP").

Here is a round up of what happened to BABA throughout this year

- A $2.8 billion fine for preventing merchants from selling on other platforms

- A series of $75000 fines for ïmproper acquisition

- Another series of $78000 fines for failing to report old deals

- Bans on exclusive contract

- Mandatory sharing of content between companies