- Alibaba's stake in Ant Group may bear fruit as shares soar 10% on open.
- BABA still needs to break through $120 resistance.
- Chinese Communist Party approves financial holding company status of Ant Group.
What began 18 months ago with Ant Group, the fintech wunderkind that fell afoul of Chinese regulators and had its IPO blocked, may be ending with Ant Group as news surfaced early Friday that those same regulators were now approving Ant's application to become a financial holding company. Reuters is reporting that the People's Bank of China has approved Ant Group's becoming a financial holding company, which is the last step before being allowed to carry out an initial public offering.
Also read: Amazon Stock Deep Dive: AMZN price target at $106 with near-term risks offset by long-term growth
Alibaba (BABA) founder Jack Ma also founded Ant Group, and BABA shareholders continue to own a large minority stake in the gigantic payments firm. BABA shares opened up more than 10% at $112.54 on Friday but quickly traded down to $108.75, still up 7.1%.
Alibaba Stock Forecast: $120 or die
As can be seen from the daily chart below, BABA stock has bounced around between the $70s and $120 for most of the year. $120 has remained significant resistance ever since February of this year. Though the Chinese Communist Party has been making peace offerings to the Chinese tech sector for months, signaling that the tech crackdown is finally over, the market is not quite ready to believe it.
Even here on Friday, BABA stock could not hold the ever-important $109.76 level that places shares of Asia's e-commerce king on a neutral footing. After so much disdain from the government, many investors are not ready to forgive and forget. Until $120 is beaten for good, BABA will be unable to gather further steam and leave behind the past year's dismal performance. One good sign is how the Moving Average Convergence Divergence (MACD) indicator remains crossed over above the zero threshold. If $120 is not broken this round though, then bulls will begin giving up on this play. Support remains at $82 and $78.
BABA stock chart, 17-6-22
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