Alibaba Group Holding Ltd (BABA)
Alibaba’s success story is no “Arabian Nights” folk tale, but rather one of excitement as the retail and e-commerce giant continues to grow alongside the Chinese middle class.
The Amazon of China has become a “Huge” retail and e-commerce business. With Alibaba’s controlling e-commerce market share in China through Taobao and Tmall.com, there might be more upside to come.
Click to view Alibaba Group Holding Ltd (BABA) shares
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Fundamentals leading up to earnings
Relations between the U.S Government and Beijing are at the order of the day once again after President Trump indicated he would increase pressure on other Chinese owned companies. This comes after Trump gave ByteDance, the parent company of TikTok 90 days to divest its U.S operations of the app.
The U.S President also signaled that Alibaba and others might be next on the chopping block, which might not go down well for Alibaba shareholders. "A significant portion of Alibaba's business is derived from U.S. e-commerce companies, which purchase goods from Chinese manufacturers and resell them in the U.S. and internationally” - Joe Tenebruso.
Alibaba Group Holding Ltd (BABA) share overview:
- Sector: Consumer Discretionary
- Market Cap of $686.90 billion.
- Dividend Yield: N/A
- Forward P/E: 28.6x
- Price/Book: 6.4x
- Next Earnings: 20th of August 2020 (before the U.S market open)
- 52 Week Range low of $161.93 and $265.68 per share high.
The e-commerce giant is not standing still and has escalated its Chinese Initial Public Offering (IPO) of its FinTech arm the Ant Group. The Ant Group is China’s largest mobile payments company and is reportedly seeking a $200 billion valuation. The stock will dual list in Shanghai and Hong Kong.
Earnings outlook
Alibaba Group Holdings is expected to top analyst's revenue expectations when it reports its first-quarter earnings for the fiscal year 2021. Current Revenue estimates are around $21.20 Billion with earnings per share projected around $1.95 to be released pre-market on the 20th of August 2020.
Chart Life
The price action has been on the slow road to recovery compared to other stocks in the sector, but Alibaba has still managed to gain 54% over the last year. The stock has seen elevated levels of volatility, mainly due to the U.S-China disputes, which is visible on the chart.
The price action is still trending upwards and well above the 50-day simple moving average of the price, which supports the current momentum to the upside.
Informed decisions
It is difficult not to take the worsening U.S-China relations into account when looking to the short term, but Alibaba might be positioned just right. The Ant Group’s dual listing should unlock value for Alibaba and with its e-commerce penetration during June should see higher share prices.
Portfolio particulars
- Portfolio Hold (Current)*
- Portfolio Buy opportunity: Around the $233.25 per share level**
- WhatsTheBeef long term target price: $275.00 per share.
Click to view Alibaba Group Holding Ltd (BABA) shares
on EasyEquities
Other noteworthy research on e-commerce stocks - The new “retail” normal is on fire! and The E-commerce’s Boom? (EBAY)
Source –EasyResearch, Yahoo finance, Reuters, Investopedia, Zacks Research, The Times of India, Foxx Business, Koyfin, The Motley Fool, Wikipedia
*Portfolio Hold (Current) refers to investors who already hold the stock within their portfolio.
**Portfolio Buy opportunity refers to Technical level crossed, which might imply that the markets behavior would support the outlook and Close above refers to a share price close above a Technical Resistance level.
Take note that all Alibaba Group Holding Ltd (BABA) share data was taken on the 17th of August 2020 during the U.S stock market open.
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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.
