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Why Alibaba Stock Popped over 6% Today?

Motley Fool2021-12-22

What happened

Shares of Alibaba(NYSE:BABA)stock bounced back from yesterday's tech sell-off, gaining 6.89% on Tuesday as stock market analysts debated whether the company's just-announced turnaround plan will work or not.

So what

Hong Kong-based investment bank CLSA led off with the bull argument, calling Alibaba stock "cheap" at its recent price under $123 a share. CLSA predicts that as Chinese consumer spending grows, as Alibaba expands further into international markets, and as Alibaba's own technology improves, these three "strategic engines" will propel the company's growth, reports TheFly.com.

Of these three "engines," CLSA places the greatest weight on Alibaba's technological prowess, saying the company "enjoys unparalleled competitive advantages and a strong technological lead," in particular in cloud-based computing, which will be "the next big growth pillar" for Alibaba stock.

In its bearish rebuttal, though, U.K. stock broker Atlantic Equities says it has little confidence that Alibaba's Taobao and Tmall subsidiaries will perform well in the near term. The analyst agrees that Alibaba stock looks "inexpensive" at 17.5 times earnings. Still, Atlantic worries that Alibaba's "aggressive" spending on improving the technology that so impresses CLSA won't necessarily pay off for Alibaba. And in particular, Atlantic sees the company's investments in "AliCloud" as being only a "modest" catalyst for the stock.

Now what

For today, it appears that investors are buying CLSA's argument over Atlantic Equities'.

Ultimately, though, this debate is going to come down to growth. Sure, 17.5 times earnings looks like avalue price for Alibaba stock -- but only if the company can produce enough growth to justify the valuation. While it's true that Alibaba has exhibited some fine growth in the past (a 30% compound rate of growth in earnings over the last five years for example, according to S&P Global Market Intelligence data), over the next five years, most analysts don't see the company producing even 10% annual earnings growth -- but less than 9% instead.

If that's the best Alibaba ends up doing, I fear that today's rebound in stock price will be short-lived.

免责声明:本文观点仅代表作者个人观点,不构成本平台的投资建议,本平台不对文章信息准确性、完整性和及时性做出任何保证,亦不对因使用或信赖文章信息引发的任何损失承担责任。

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评论22

  • saya_
    ·2021-12-23
    Bloop bloop
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  • Jialatsia
    ·2021-12-22
    Meep
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  • LimLS
    ·2021-12-22
    Alibaba going up and down for a single day or few days is normal nowadays. Very volatile. Need to track its performance over many more days to see where it is going. One day price movement Just do not provide any good information, however big it might be.
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    • dimsum
      There is no doubt that investing in Alibaba is equivalent to investing in the future.
      2021-12-22
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    • qingg123
      If I had to choose between Alibaba and JD.COM, I would choose the latter.
      2021-12-22
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    • waipoin
      No matter how bad Alibaba's performance in 2021 is, the company is still an excellent company.
      2021-12-22
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    查看更多 2 条评论
  • SanWangtikup
    ·2021-12-22
    Good
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  • kenjoe
    ·2021-12-22
    Alibaba will last. 
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  • DragonKC
    ·2021-12-22
    Those have interest in Baba will say it's stock is cheap, whereas those bet again BaBa will bring  down price.  Everyone has their own agenda.  Best to judge ourselves. 
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    • WenJieChan
      [smile]
      2021-12-22
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    • keaty
      I stop buying for a while now. not so soon the china... thing go away
      2021-12-22
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  • JLKang
    ·2021-12-22
    I agree with your sentiment 
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  • Barbarazhao
    ·2021-12-22
    Only time tells
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  • STtee
    ·2021-12-22
    Should we bet on this??[Sly] 
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  • tig2021
    ·2021-12-22
    Ok
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  • June C
    ·2021-12-22
    Long way to bounce back
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  • HelloKitty55
    ·2021-12-22
    Ok
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  • TinPLJ
    ·2021-12-22
    Still a long way to recover on previous peak
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  • SSSG
    ·2021-12-22
    Hope it will stand, it's fundamental is good..
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    • LimLS
      Fundamental is good but the competition is getting tougher nowadays. A good company to consider but equally having many risks. Might be better off with less risky companies with equally good growth
      2021-12-22
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    • ngckkk
      yes!
      2021-12-22
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  • james33738
    ·2021-12-22
    Yes
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    • BOTANIKA
      [Happy]
      2021-12-22
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  • WwwQY
    ·2021-12-22
    Cheap may go cheaper
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  • zion1
    ·2021-12-22
    Motley has seen through the games of Baba. Do not be fooled by the popped 6% as is我 want your money sink and sink in.
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  • BullZai
    ·2021-12-22
    Why the analyst are predicting a low growth rate for BABA< 10%? If the Cloud & e-commerce growth rate  of BABA not going to do well next 5 years… then will the other same industry stocks even US market like Amazon, MSFT, Google, going to? 
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    • RonaldNixon
      You can't believe everything an analyst says. But the decline is affirmative. After all, Alibaba has experienced years of rapid growth.
      2021-12-22
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    • tig2021
      ok
      2021-12-22
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    • HelloKitty55
      ok
      2021-12-22
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    查看更多 2 条评论
  • crystaly
    ·2021-12-22
    Like pls
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    • henry0leu
      liked and commented
      2021-12-23
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  • 1ac021c2
    ·2021-12-22
    Nice
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    • 1ac021c2
      Yea
      2021-12-22
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