Alibaba Stock News: BABA shares up despite slowing economy

Clay Webster FXStreet

With Alibaba’s (BABA) Hong Kong-listed cousin (9988.HK) down 2.15% in the Asian session on Monday, BABA stock is bucking the trend. BABA shares were relatively flat in Monday’s US premarket but opened 2.6% higher on the NYSE.

BABA Stock News: the sputtering Chinese economy

If it is not one thing, then it is another. That is how it must feel to be a BABA investor at this point. Last week the Chinese GDP figures for Q3 showed the economy was growing at 4.9%, well below the already conservative projection of 5.2%. Industrial production, the bread and butter of the Chinese economy, came in at 3.1% compared with expectations of 4.5%.

This comes after the Evergrande Group’s flirtation with bankruptcy caused BABA and many other Chinese stocks to lose sympathy.

BABA first fell from grace an entire year ago when the IPO of Ant Financial was pulled by regulators following CEO Jack Ma’s criticism of the Chinese government’s financial regulation. As a major backer of Ant, Alibaba stood to make a bundle from the IPO. The Chinese government then launched a crackdown that has hurt the share prices of a large swath of its biggest tech firms.

This saga began the steady trend downward where BABA fell from a high of $319.26 one year ago to early October’s low of $138.43, in the process erasing $400 billion in market capitalization. Since then the stock regained its composure, and BABA made it back briefly to the $180s.

BABA key statistics

Market Cap	$454 billion
Price/Earnings	19.7
Price/Sales	3.78
Price/Book	2.93
Enterprise Value	$402 billion
Gross Margin	38%
Net Margin	19%
52-week high	$319.32
52-week low	$138.43
Short Interest	2.7%
Average Wall Street Rating and Price Target	Buy 242.11

BABA Price Chart: BABA must stay above $160

On Friday, BABA bounced off the $162.82 support level, although it still closed a bit higher at $164.94, down 2.9% from Thursday. The area around $163 had previously shown itself important when it closed near there on October 12 and experienced a low and a high on September 13 and 14, respectively.

As FXStreet has said previously, the most important thing is to stay above $160. Below here, and especially further support at $158.50, it is a straight shot to the $140s.

On the other hand, if BABA price reverses to above $170, bulls will return to the fold to drive the price even higher. The current correction witness over the past six or seven sessions could very well find its footing near $160 and ricochet higher. Afterall, the mid-October swing high did form a higher high than the early September ridge. Closing above $182.32 will signal the truth in this claim.

If on the other hand, BABA price dives through the 21-day moving average at $163.94, then beware.

BABA 1-day chart

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.

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