Alibaba Stock Forecast: BABA chart shows no rebound in motion
- Alibaba stockholders still worry BABA will be delisted in the US like DIDI.
- BABA stock rebound has stalled ahead of $130.
- Alibaba to hold investor meeting on December 16-17.
Alibaba (BABA) was down about 1.3% around $124 per share 15 minutes after Wednesday's open, although it was much better than the immediate opening prices that saw the ecommerce titan trade as low as $121.32 . It was not a good look as the indices were modestly green.
Despite the S&P 500 finishing off a sizable two-day rally on Tuesday, rising 2.1%, BABA stock rose a more modest 1.6%. To make matters worse, shares opened at $129.30 but gave up ground as the session progressed. Though investors are assuredly hoping to capitalize on Monday's 10% rally further on this week, Wednesday's price action demonstrates that this rally does not have legs.
Alibaba (BABA) Stock News: investor day scheduled for next week
BABA stock started the week with an unexpected 10.4% rise after many stocks rallied in response to better than expected data on fighting the Omicron covid variant. This was also a rebound from Friday's crash that saw BABA drop from $122 all the way to below $110 on the back of a delisting announcement from a fellow Chinese equity.
Last Friday, DiDi Global (DIDI) announced the policy of delisting from the US on its Weibo account. "Following careful research, the company will immediately start delisting on the New York Stock Exchange and start preparations for listing in Hong Kong," the post read.
Alibaba shareholders understandably are worried that it may be next as the Chinese government has already strong-armed it into spending $15 billion over the next four years on political initiatives rather than on corporate priorities.
Possibly sensing investors running for the hills, Alibaba announced on Wednesday that it will hold virtual investor meetings on December 16 and 17. At least three executives will give presentations.
BABA key statistics
| Market Cap | $332 billion |
| Price/Earnings | 16 |
| Price/Sales | 2 |
| Price/Book | 2 |
| Enterprise Value | $284 billion |
| Operating Margin | 13% |
| Profit Margin |
15% |
| 52-week high | $274.29 |
| 52-week low | $108.70 |
| Short Interest | 3% |
| Average Wall Street Rating and Price Target | Buy, $212.05 |
Alibaba (BABA) Stock Forecast: BABA heading back to $109
The fact that BABA price action sank after reaching near $130 on Tuesday is disheartening. The stock had ridden $130 as support in the previous week as the level holds long-term importance. Now this level is acting as resistance. Wednesday's continued decline makes Monday's rally appear like a dead cat bounce.
BABA's stock price reached a four-and-a-half year low near $109 in the early part of Friday's session. If BABA cannot close above $130 this week, and even then quickly run back to $140, we would expect BABA to once again retest $109.
The market does not seem to care that BABA is trading at just two times revenue or a forward P/E near 11. The news of Chinese government meddling is just too worrisome for the market to focus on fundamentals right now. $109 is support from September 2016. Below here, support is all the way down at $87.
One note of optimism can be seen in the Moving Average Convergence Divergence (MACD). The differenential between the MACD and signal have begun to narrow as the lines move sideways. This may mean that a medium-term rally is about to commence.
BABA 1-day chart
The author owns shares in Alibaba.
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
