The Impact of Political Events on Stock Prices

Abstract

While various factors influence stock prices, the impact of political factors on stock prices is the main focus of this paper. We closely analyze the stock price of a specific company, which we believe is significantly influenced by political events. To achieve this, we conduct valuation exercises on six different dates, coinciding with the end of each fiscal year from 2018 through 2023, using the discounted cash flow method and trading comparables. Our goal is to compare the intrinsic share price of the company with its market price over the past six years, shedding light on the main political factors that could be responsible for any differences. As for our choice of company, we have selected Alibaba - a Chinese multinational organization with a stock listing in the U.S. market. Our selection for this specific company was based on our belief that its share price is significantly undervalued, and has been for a notable time, although this is attributable to various factors, such as the increased competition from tech giants, we believe it is in large part due to political factors.