Company / Analytics

Analytics, 26 November 2021

Alibaba Shares Outlook

Alibaba shares suffered their biggest 5-day selloff in history, this week. But despite slashing their price target by 35%, analysts remain positive about the China-based e-commerce company.

The stock has plunged 20.6% over the past five sessions to close Tuesday at the lowest price since Jan. 3, 2019. In addition to its disappointing fiscal second-quarter results, Alibaba is facing pressure from regulatory concerns and macroeconomic pressures in China.

That five-day selloff was by far the biggest since the stock went public in September 2014. The previous weakest five-day run, before the current stretch of losses, was the 16.3% tumble through Aug. 20, 2021.

Alibaba Stock Forecast

Alibaba analyst Susquehanna’s Patil lowered his stock price target to $200 from $310, but this new target still implies nearly 50% upside from current levels. The analyst also reiterated the positive rating he’s had on Alibaba at least since February 2020.

While its recent financial results were disappointing, speaking purely in the context of quantitative growth, Alibaba has only slightly deviated from its exponential trend in the last quarter. Alibaba’s quarterly results were weak, mainly in the context of margin. In this sense, the situation will probably get worse before it improves.

The company’s financial results now have little impact on its price. The key reason is risks. For starters, Alibaba has been dealing with regulatory issues, and now slowing macroeconomic growth in China is pressuring the business in the near term.

While COVID may continue to cause periods of softness in the near-term macro, analysts continue to view Alibaba as the China e-commerce category killer with a large secular growth opportunity and maintain a long-term-oriented positive view.

How did Alibaba stock move?

Alibaba shares have plunged 51.7% over the past year, while the iShares MSCI China exchange-traded fund MCHI has dropped 17.7% and the S&P 500 index SPX has rallied 29.0%. Some analysts have pointed to Alibaba’s investor day, which kicks off on Dec. 16, as a potential important catalyst for the stock going forward. Of the 52 analysts surveyed by FactSet who cover Alibaba, no less than 36 have cut their stock price targets since Alibaba reported earnings on Nov. 18. That has lowered the average price target to $201.46 from $236.98 at the end of October.

Meanwhile, 47 of those analysts, or 90%, are bullish on the stock, up from 89% at the end of October. Of the five analysts who aren’t bullish, only one is bearish and the other four are neutral.

The current consensus among 54 polled investment analysts is to buy stock in Alibaba Group Holding Ltd. This rating has held steady since November when it was unchanged from a buy rating.

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