Alibaba Group's (NYSE: BABA) Taobao, along with four other e-commerce platforms, including Pinduoduo (NASDAQ: PDD), and JD.com (NASDAQ: JD), has been summoned by a consumer protection organization in China's Zhejiang Province, Reuters reported.
According to the source, the companies were summoned due to live-streaming irregularities during the Singles' Day shopping festival. Notably, ByteDance's Douyin, the Chinese version of TikTok, and the video-sharing mobile app Kuaishou were also summoned.
Reasons Behind SummonAccording to the consumer protection organization, around 30% of live-streamers showed irregularities during the Singles' Day festival, while almost 40% of the products sold during the event did not meet national standards.
Additionally, the Cyberspace Administration of China (CAC) revealed that online platforms, including social media networks and video-sharing sites, will be thoroughly scrutinized to reduce deception on the internet.
Wall Street’s TakeRecently, Daiwa analyst John Choi reiterated a Buy rating on Alibaba but lowered the price target to $170 (43.27% upside potential) from $195.
Consensus among analysts is a Strong Buy based on 22 Buys versus 3 Holds. The average Alibaba price target of $203.65 implies 71.62% upside potential from current levels. However, shares have lost 46.6% over the past year.
Website TrafficTipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), the world’s biggest website usage monitoring service, offers insight into Alibaba’s performance this quarter. According to the tool, the Alibaba website recorded a 10.13% decrease in global visits in November compared to the same period last year. Also, a quarter-to-date comparison showed a decline of 3.76% compared to Q3 2021, while year-to-date website traffic growth stands at 1.67%.
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2021 is the year that Alibaba (NYSE:BABA) shareholders would like to forget. This Chinese tech giant’s ADR (American Depositary Receipt) continues to trend lower, crafting lower lows.
It’s worth noting that Alibaba’s ADR has lost about 49% of its value year-to-date. Moreover, it is down over 53% over the past year.
Moderation in its growth rate due to the macroeconomic slowdown and intensifying competition weighed on Alibaba stock. Furthermore, heightened regulatory concerns led investors to dump Chinese tech stocks.
What to Expect Now?The weak macroeconomic conditions and increased competitive activity prompted management to lower its full-year sales growth target. Alibaba now expects revenues to increase by 20-23% in FY22, lower than its earlier growth forecast of 30%.
Notably, investor and hedge fund sentiment remains negative about Alibaba stock. TipRanks’ Stock Investors tool shows that 5.9% of investors holding portfolios on TipRanks cut their exposure to Alibaba stock in the past month.
Further, TipRanks’ Hedge Fund Trading Activity tool shows hedge funds sold 1.1 million Alibaba shares in the last three months.
Citing the competitive landscape, John Choi of Daiwa lowered his price target on Alibaba stock to $170 from $195. However, Choi has a Buy rating on Alibaba.
Along with Choi, Elinor Leung of CLSA maintained a Buy rating on Alibaba stock. Leung views Alibaba’s valuation as “Cheap.” Further, the analyst sees its cloud offerings as the next growth catalyst.
It’s worth noting that Alibaba’s cloud computing revenues increased by 33% during the last reported quarter. Alibaba’s proprietary cloud technology and investments in new product offerings augur well for growth.
Wall Street’s TakeBesides Choi and Leung, the majority of analysts maintain a bullish view about BABA stock. On TipRanks, Alibaba sports a Strong Buy consensus rating based on 22 Buy and 3 Hold recommendations.
Further, due to the recent selling, Alibaba's stock forecast and price targets on TipRanks show solid upside potential. The average Alibaba price target of $203.65 indicates 71.6% upside potential to current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates Read full disclaimer >
Here’s a sad investing story for 2021 in one word: Alibaba (BABA).
There’s no way around it, investors have endured a torrid time. The negatives have kept on piling up; from lackluster earnings to a slowing Chinese economy to regulatory uncertainty, and the result has been year-to-date share losses of a depressing 49%. Or as Truist’s top Youssef Squali puts it, it is “the worst mega cap in our coverage universe.”
However, last week the ecommerce giant hosted its annual Investor Day (which took place over 2 days), and Squali came away confident Alibaba wants to put things right so to “rebuild shareholder value.” Whilst recognizing that “macro, competition and regulatory hurdles abound,” the 5-star analyst came away “impressed by the massive opportunity for BABA in China/SE Asia.”
So, what did Squali particularly like?
Well, in a funny sort of way, Squali was glad to learn of the “magnitude of losses on emerging initiatives including Local, Taobao Deals, Taocaicai and International.” More to the point, what Squali liked was to be provided with details of revenues and profitability per segment. And those – for now – losing initiatives also shone a light on the “sustained healthy margin of the more mature, China Commerce core business.”
Those losing initiatives form part of the huge investment cycle the company is undertaking and two segments which were in investment mode for the last several years - Cloud and Cainiao – are starting to reap the rewards with both now “virtually at profitability.”
Importantly, Squali says, management is also showing a willingness to recognize the “potential of creating value by raising external capital for money-losing units.” This will not only help reduce the “investment pressure” on the group's margins but will also “capture the valuation disparity between its subsidiaries and public peers.”
Squali cites Trendyol, the company's Turkish ecommerce business unit, as an example of this strategy. Trendyol raised $1.5 billion in a private placement led by Softbank giving the company a $16.5 billion valuation. There was also talk of separately listing certain units. Squali thinks Cainiao and Lazada are two businesses that could “materially benefit from such a strategy.”
To this end, Squali rates BABA stock a Buy and has a $200 price target for the shares. Investors stand to pocket a 68% gain, should all go according to plan over the next 12 months. (To watch Squali’s track record, click here)
Most analysts remain on BABA’s side; barring 3 Holds, all 22 other ratings are positive, making for a Strong Buy consensus rating. Following this year’s share losses, there’s plenty of upside in the cards; the $203.65 average price target suggests investors will be sitting on returns of ~71% a year from now. (See Alibaba stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Alibaba (BABA), a world-class online retailer that some call the Chinese answer to Amazon (AMZN), is having a rough time with things lately. I remain bearish on Alibaba because far too many forces are aligned against this company, which will make for rough going for investors. (See Analysts’ Top Stocks on TipRanks)
Alibaba's year in share prices is pretty much the definition of disaster. The company led off the year with an uptrend that brought it from the $220 range to the $270 range, and that looked solid enough. However, that gain was pretty much the last major uptrend that Alibaba would see in 2021.
The company retraced its gains back to the $220 range. It stayed there for much of April going into May. Then, another slip brought the company slightly lower. Such slips continued intermittently until October, when a resurgence brought new hope of retracing to $200.
However, that was short-lived as mid-November brought a plunge that continues to this day. Alibaba is now trading at a level not seen since 2017.
Another blizzard of bad news recently slammed into the company. A downgrade at Atlantic Equities is perhaps the latest point. The analyst downgraded Alibaba from "overweight" to "neutral." The biggest issue was two particular Alibaba properties: Taobao and Tmall. Atlantic Equities analysts were skeptical that either would see improvements in their overall performance any time soon.
That was just the start, however. Alibaba's cloud business also lost a major ally in the Chinese government. The Ministry of Industry and Information Technology suspended a partnership arrangement with Alibaba Cloud for the next six months. The reason? Alibaba Cloud apparently failed to report a security vulnerability in the Log4j logging library system.
Since Log4j is widely used, the latest reports suggest that the security vulnerability has been exploited extensively already. Alibaba Group Holding has also slipped from the worldwide list of top 10 companies by market capitalization.
Badly Beaten and May Get WorseEssentially, the problems Alibaba faced previously are all still in play. Moreover, these problems may be getting worse. The blistering regulatory environment that Alibaba has previously taken on is just as bad as it previously was.
It may actually be worse; one of China's regulators directly cutting ties with the company for six months isn't a help for Alibaba Cloud. Sliding out of the top 10 in market cap worldwide certainly doesn't underscore Alibaba's image as a globe-straddling titan.
Worse, Alibaba recently released a turnaround plan that doesn't look like it will turn around much of anything. One of its tentpole principles is to increase the number of subscribers in its 88VIP subscription program.
There's a good reason for this; 88VIP subscribers spend an average of eight times more than the average customer does. However, 88VIP subscribers only make up around 50 million out of the 946 million monthly users the company has.
Management is also seeking to improve performance and draw interest for its artificial intelligence systems on digital advertising. The company is looking to invest in emerging growth areas, mostly focused on the Taobao Deals group-buying marketplace. These plans are uncertain at best.
Wall Street's TakeTurning to Wall Street, Alibaba has a Strong Buy consensus rating. That's based on 22 Buys and three Holds assigned in the past three months. The average Alibaba stock forecast of $203.65 implies 70.8% upside potential.
Analyst price targets range from a low of $140 per share to a high of $252 per share.
Concluding ViewsAll the problems Alibaba was facing previously are still in play. With Evergrande's collapse now a real thing instead of a potential hazard, there's likely to be fallout. Any wealth effect that might have been realized by climbing investment is lost. That's likely to directly impact disposable wealth and the confidence required to spend it.
Throw in a regulatory environment that only seems to get more hostile for Alibaba, and the picture starts looking bleak. I'm bearish on Alibaba because there's entirely too much going wrong for the company, and its prospects for improvement look like a disaster waiting to happen.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates. Read full disclaimer >
The Chinese Ministry of Industry and Information Technology (MIIT) has suspended its cooperative partnership with Alibaba Group Holding Ltd.’s (BABA) subsidiary Alibaba Cloud Computing following its failure to report and address a cybersecurity vulnerability, according to a report by Reuters citing 21st Century Business Herald.
The telecommunications regulator said that Alibaba Cloud failed to immediately report vulnerabilities in Apache Log4j2, its open-source logging tool, to the ministry. The Java-based tool is used in enterprise systems and web applications.
The partnership, which was related to cybersecurity threats and information-sharing platforms, is scheduled to be reassessed in six months based on the company's internal reforms.
The ministry said, “This vulnerability may lead to remote control of equipment, which may lead to serious harms such as the theft of sensitive information and interruption of equipment services. It is a high-risk vulnerability.”
Alibaba Cloud notified the U.S.-based Apache Software Foundation after discovering a remote code execution vulnerability in the tool. However, the regulator said that it did not receive a report about the issue from Alibaba Cloud but rather from a third party.
Following the news, Alibaba’s shares were trading nearly 4% lower at the time of writing in the pre-market session.
About Alibaba CloudAlibaba Cloud provides cloud computing and artificial intelligence services to enterprises, developers, and government organizations in more than 200 countries and regions across the world.
Wall Street’s TakeAfter the release of the news, Daiwa analyst John Choi maintained a Buy rating on the stock along with a $170 price target (38.2% upside potential).
Further, CLSA analyst Elinor Leung reiterated a Buy rating on Alibaba with a price target of $250 (103.3% upside potential).
Leung said, “CEO Daniel Zhang believes China's consumption can continue to grow and that cloud is the next big growth pillar.”
Overall, the stock has a Strong Buy consensus rating based on 22 Buys and 3 Holds. The average Alibaba stock forecast of $203.65 implies 65.6% upside potential. Shares have lost around 52% over the past year.
Website TrafficTipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Alibaba’s performance.
According to the tool, compared to the previous year, Alibaba’s website traffic registered a 10.1% decrease in global visits in November. However, website traffic has increased 1.7% year-to-date versus the same period last year.
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