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Alibaba's magic carpet ride isn't over

Alibaba's magic carpet ride came to a standstill on Thursday following an unexpected earnings miss and a clash with China's government, but experts tell CNBC that the world's largest e-commerce firm remains a compelling investment.

Shares plunged 10 percent after Alibaba reported a 40 percent rise in revenue for the last three months of 2014 year-on-year, below expectations for a 60 percent increase, with investors complaining that growth was too dependent on the annual Singles Day event. Thursday marked a rare falling out with the investor community following Alibaba's wide-spread popularity since its market debut last September.

Alan Haft, Partner at Kelly-Haft Financial, called the selloff overblown. "This is like having a Ferrari and being bummed out that instead of doing 220 miles around the bend, it only did 210," he said on Friday.

"Just buy on those dips because this is a great company for the long-term investor," he added, noting that the profit numbers were still solid. Earnings per share (EPS) beat expectations by 6 cents while gross merchandise volume (GMV), i.e. the total of Alibaba's online transactions, rose 49 percent.

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"eBay would love to report those kind of numbers," noted Martin Pyykkonen, managing director at Rosenblatt Securities.

Alibaba's stock price has fallen over 20 percent since its November highs, but most analysts say they remain buyers at the current $89 level.

"Our target price is $118, so that represents a more than 30 percent upside from here," said Cynthia Meng, managing director for China and Hong Kong Telecom, Media and Technology Equity Research at Jefferies.

Hong Wu | Getty Images News

"I would take the bigger picture view and say 40 percent revenue growth is still very fast; it's still the dominant e-commerce company in China, and at just over 20x the 2016 estimate, it's an attractive place to add to the stock," said Josh Spencer, portfolio manager at T.Rowe Price.

Interference from Beijing

Thursday's selloff was made worse after China's State Administration of Industry and Commerce accused the company on Wednesday of failing to crack down on counterfeit goods being sold on its websites. Experts call this a major headwind for Alibaba as Beijing is expected to clamp down on the intellectual property (IP) sector after targeting corruption and the environment for much of last year as part of President Xi Jinping's plan to overhaul the Chinese economy.

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"Is this the first shot across the bow from the government?" asked Jonathan Brodsky,managing director at Advisory Research.

"When we see what's happened in the past 24 hours, we're not as focused on revenue or earnings. We're looking at this issue with the government...we've been investing in China and wondering when IP law issue will evolve," he continued.

But the government isn't a challenge for all market players. Beijing recognizes that Alibaba is a shining star in the economy, so the fact that they are coming on strong is a sign that there's a lot of good things to come for this stock, said Alan Haft of Kelly-Haft Financial.

"I actually perceive it as a positive because what the Chinese government is really saying to Alibaba and the international community is 'clean up your act, we want to make this as legitimate of a company as possible'."