Alibaba Group Holding (NASDAQ:BABA) is going through what some wags call its “Cambridge Analytica moment.”

They mean that like Facebook (NASDAQ:FB) before it, Alibaba has been caught in a scandal involving how it uses data. China’s government is cracking down on its “Cloud Emperors.” The company even suffered a loss in its most recent quarter, its first.

The BABA stock price hit a peak of almost $310 a share in October. They opened May 24 at $211. I was late getting out of my most recently purchased Alibaba shares, taking a profit of just 21% after selling at $236.

But is now the time to get back in?

BABA Stock Bull Case

Around InvestorPlace, there’s sentiment for BABA bullishness. Our Tim Biggam thinks it is time to get back in. Nick Clarkson looked closely at that bad quarter. He found the loss was entirely due to a fine of $2.8 billion imposed by the mandarins in Beijing.

To Calpers, the huge California retirement system, this meant Alibaba is under government control. Managers there sold 4.1 million shares, nearly the fund’s entire position, during the first quarter.

The decision by ByteDance, owners of TikTok, to take its non-China business out of Alibaba’s cloud, meant growth there fell to “only” 37%. Last year I called Alibaba’s the world’s most powerful cloud, because it can become a customer’s entire IT department.

All this “bad news” is actually good news for the bulls. Total revenue for Alibaba was up year-over-year. The company has vowed to increase its spending to fund more growth. To some, this makes it the best deal in town, a growth stock selling at a low price.

But how much of a bargain is it? Alibaba reports in Hong Kong dollars, which sell at 7.70 to the U.S. currency. That makes its revenue for all of 2021 $106 billion, against a market cap of $581 billion.

BABA stock now sells for about 5.5 times revenue, compared with 3.8 times for Amazon (NASDAQ:AMZN), with which it’s often compared. But Alibaba doesn’t buy the goods it’s selling, it’s merely an agent. A purer cloud play like Alphabet (NASDAQ:GOOGL), with minimal product exposure, sells for 8x earnings.

The China Card

Whether Alibaba is cheap depends entirely on the government of China.

China has been on the war path since last year when Jack Ma, who still controls the company, spoke out against the government’s economic policies. The expected IPO of Ant Financial was cancelled. The company was forced to take more of its loan risk, and when it comes out it will be a financial holding company. Then there was the $2.8 billion fine, imposed because Alibaba was keeping its merchants from doing business through other channels. 

Alibaba’s response has been to bend the knee. It has vowed to change. It has cut executive salaries. Ma has become a near-recluse, even leaving a business school he founded. Public opinion has soured.

But Ma is still worth $46 billion.

Tough Times for Cloud Czars

Life is tough right now for all the Cloud Czars, both in China and in America.

Governments around the world want to crack down on them because they’re the world economy’s landlords. Their networks of hyperscale data centers or “clouds” dominate the internet, and the internet dominates the global economy.

But China is no more likely to take ownership of its clouds than we are. To do so would risk a huge center of government power. What all sides are doing is seeking control over the clouds and, by extension, of the internet and their own economies.

Will China really go further with that than we will? I doubt it. That’s why now might indeed be a good time to find a way back into Alibaba stock.

On the date of publication, Dana Blankenhorn held LONG positions in AMZN and FB. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack newsletter.