BABA Stumbles Despite Upbeat Q3 Results

Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA) entered the earnings confessional this morning, posting fiscal third-quarter earnings and revenue that topped Wall Street's estimates. The company cited a surge in active users, as well as its cloud computing unit. While it's quarterly results were upbeat, the company has been dealing with escalating regulations from the Chinese government, which suspended Alibaba founder Jack Ma's $37 billion initial public offering (IPO) for his business Ant Group. This could be what is weighing on BABA this morning, which is down 1.2% at $261.14 at last check. 

Alibaba stock, BABA stock news and analysis

The Chinese government is watching Alibaba founder Jack Ma's business empire closely

While news that Ma had reemerged after a multi-month disappearance in mid-January helped the equity reclaim its late-December pre-bear gap levels, the shares have since hit a plateau, with pressure emerging at the $266 mark. The 40-day moving average has just reemerged as support however, and in the last 12 months, BABA is up roughly 28%. 

Analysts are holding out hope for a bounce for BABA. Just one of the 16 in coverage call the equity a "hold," while the rest say "buy" or better. Plus, the 12-month consensus price target of $323.17 is a 22.1% premium to last night's close. 

Option traders have been quite bullish, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and Nasdaq OMX PHLX (PHLX), 2.85 calls have been picked up for every put over the past 50 days. This ratio stands higher than 73% of readings from the past 12 months, suggesting a healthier-than-usual appetite for long calls of late.

Disclaimer: Schaeffer's Investment Research ("SIR" or "we" or "us") is not registered as an investment adviser. SIR relies upon the "publishers' ...

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Ian Bridle 4 weeks ago Member's comment

I've studied the last 10 years of financial reports for BABA and can't understand the current share price. From a value investor stand-point the share price should be significantly North of $300 per share.