Can Alibaba Hang On?
Summary
Alibaba (BABA) has shown strong technical buy signals, gaining 39.78% since a Trend Seeker buy signal on 1/27, and is above key moving averages.
The company operates across multiple segments, including e-commerce, cloud computing, and digital media, with a market cap of $301 billion and a P/E of 16.81.
Analysts have mixed opinions, with a consensus price target of $122; Value Line and MorningStar highlight risks, including market share loss and China policy concerns.
Barchart emphasizes the stock's volatility and suggests a disciplined investment approach, recommending regular reevaluation of stop losses to manage risk.
The Chart of the Day belongs to the Chinese internet retailer Alibaba (BABA). I found the stock by using Barchart's powerful screening functions to find stocks with the highest technical buy signals, highest Weighted Alpha, superior current momentum and having a Trend Seeker buy signal then used the Flipchart feature to review the charts for consistent price appreciation. Since the Trend Seeker signaled a buy on 1/27 the stock gained 39.78%.
BABA Price vs Daily Moving Averages:
BABA (Barchart)
Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People's Republic of China and internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others. It operates Taobao and Tmall, which are digital retail platforms; Alimama, a proprietary monetization platform; 阿里1688 and Alibaba.com, which are online wholesale marketplaces; AliExpress, a retail marketplace; Lazada, Trendyol, and Daraz that are e-commerce platforms; Freshippo, a retail platform for groceries and fresh goods; and Tmall Global, an import e-commerce platform. The company also operates Cainiao Network logistic services platform; Ele.me, an on-demand delivery and local services platform; Koubei, a restaurant and local services guide platform; and Fliggy, an online travel platform. In addition, it offers pay-for-performance, in-feed, and display marketing services; and Taobao Ad Network and Exchange, a real-time online bidding marketing exchange. Further, the company provides elastic computing, storage, network, security, database, big data, and IoT services; and hardware, software license, software installation, and application development and maintenance services. Additionally, it operates Youku, an online video platform; Quark, a platform for information search, storage, and consumption; Alibaba Pictures and other content platforms that provide online videos, films, live events, news feeds, literature, music, and others; Amap, a mobile digital map, navigation, and real-time traffic information app; DingTalk, a business efficiency mobile app; Tmall Genie smart speaker; and Qwen, an artificial intelligence chatbot. The company was incorporated in 1999 and is based in Hangzhou, the People's Republic of China.
Barchart's Opinion Trading systems are listed below. Please note that the Barchart Opinion indicators are updated live during the session every 20 minutes and can therefore change during the day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report.
Barchart Technical Indicators:
88% technical buy signals
79.71+ Weighted Alpha
70.19% gain in the last year
.315 - 60 month Beta
Trend Seeker buy signal
Above its 20, 50 and 100 day moving averages
12 new highs and up 47.78% in the last month
Relative Strength Index 82.67%
Technical support level at $124.59
Recently traded at $125.79 with 50 day moving average of $92.91
Fundamental Factors:
Market Cap $301 billion
P/E 16.81
Dividend yield 1.29%
Revenue expected to grow 6.16% this year and another 8.05% next year
Earnings estimated to increase 1.17% this year and an additional 12.59% next year
Analysts and Investor Sentiment -- I don't buy stocks because everyone else is buying but I do realize that if major firms and investors are dumping a stock it's hard to make money swimming against the tide:
Wall Street analysts issued 28 strong buy, 7 buy, 7 hold and 1 sell opinion on the stock
Their price targets between $85 and $155 with a consensus of $122
Value Line gives the stock an above average rating with a price target of $94 for a 25% loss and comments:" Alibaba stock has been on a roller coaster ride over the past six months. Subsequent to the recent dip in price, Alibaba ADSs offer wide capital appreciation potential over the 2027- 2029 horizon. That said, risk-averse investors would be wise to steer clear, given the stock's elevated volatility lately. "
CFRAs MarketScope rates the stock a hold with a price target of $105 and comments:" Our Hold rating reflects our view of improving fundamentals, partly offset by inherent China risks. Although we're extremely concerned about China's policy motives, we think most segments are witnessing improving trends (albeit at a very slow pace) "
MorningStar thinks the stock is 26% over valued and comments: "Alibaba is losing market share to PDD Holdings, or PDD, and Douyin in the China e-commerce business, and we don't see a quick fix in the near term. Alibaba's number of annual active consumers in the China retail marketplace was surpassed by PDD in the fiscal year ended March 2021. Meanwhile, Douyin has gained share from Alibaba especially in the beauty and apparel categories in recent years, and entered the traditional search-based e-commerce space, competing directly with Alibaba. The number of annual active consumers at Alibaba is close to the ceiling in China."
Of the 3.166 investors following the stock on Motley Fool 2,716 think the stock will beat the market and 450 think it won't
524,930 investors monitor the stock on Seeking Alpha
Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance and reevaluate your stop losses at least on a weekly basis.
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