Some pundits here say there are two things at play in China's play to regulate their own companies:

 

• Avoid the deep wealth disparities that the US has in place
• Establish in a no uncertain way who is boss

 

After thinking it through for a while, I believe both are true.  The second may carry a bigger weight in Xi Jinpin's way of thinking.  It also involves having access and control over the vast amounts of personal data being collected on the general Chinese population.  What they saw happen here in 2016 here is an eye opener for any regimen, regardless of political leaning.  We have yet to have any control over ours.

I think Xi Jinpin and his band of merry regulators may still have a way to go.  The Chinese economy has grown tremendously precisely because it was allowed to, now they think it went to far and a process to reign it in may take some time to fully play out.

So, I think there will be more bumps on the road, and I also think that the result of all these regulations will most definitely cut some points off their GDP.  All of these things will cool off the growth of all internet related companies over there.

Alibaba for example always had a "China Discount" on its multiples.  Now that discount has been increased as investors adjust the risk to a higher level due to all these recent developments.

While the company must definitely is an amazing company with exceedingly good management, it has little control over what the communist party wants or can impose.

All that said, I do believe that there is a chance over the next 18 months that its stock price can rise to a multiple in the mid 20s.  However, I say this cautiously as the Chinese Government’s power and control trumps anything else.