China’s Alibaba Shares Slump as Revenue Growth Disappoints
China’s Alibaba Group Holding shares slumped over 6% on Thursday after the e-commerce giant recorded the slowest revenue growth since it went for an IPO in 2014.
The multinational technology giant reported adjusted quarterly earnings of CNY 16.87 per share in the fourth quarter, beating the market expectations of CNY 16.18 per share.
China’s biggest online commerce company said its revenue rose nearly 10% to CNY 242.58 billion from a year earlier. That missed the market expectations of CNY 246.37 billion, and this was the first time sales grew below 20% in a quarter, Reuters reported.
“Alibaba reported Dec results with total revenue in line with our estimates and consensus. Adjusted EBITDA declined 24.9% YoY to RMB 51.4 billion, ahead of our estimates. Non-GAAP earnings came in 1.7% ahead of consensus,” noted Thomas Chong, equity analyst at Jefferies.
The U.S.-listed Alibaba stock traded 6.67% lower at $104.90 on Thursday. The stock fell over 7% so far this year after plunging over 48% in 2021.
“Domestic commerce faces macro headwinds and intense competition, but growth momentum in international commerce and cloud is encouraging. We expect ongoing strategic investments. Alibaba is determined to expand in less-developed regions, local services, and international commerce, given strong growth in these areas,” noted Gary Yu, equity analyst at Morgan Stanley.
“We see limited near-term catalysts but F2023e P/E valuation remains attractive. We think current valuation underrepresents the value of cloud and international businesses. We also see further downside support from additional disclosures to separate losses from new investments from profitable core e-commerce businesses.”
Alibaba Stock Price Forecast
Twenty-two analysts who offered stock ratings for Alibaba in the last three months forecast the average price in 12 months of $189.13 with a high forecast of $250.00 and a low forecast of $140.00.
The average price target represents an 83.62% change from the last price of $103.00. Of those 22 analysts, 19 rated “Buy”, three rated “Hold”, while none rated “Sell”, according to Tipranks.
Morgan Stanley’s base target price was $165 with a high of $360 under a bull scenario and $110 under the worst-case scenario. The investment bank gave an “Overweight” rating on the Chinese e-commerce company’s stock.
Several analysts have also updated their stock outlook. Truist Securities cut the target price to $180 from $200. Stifel lowered the target price to $150 from $170. Raymond James slashed the target price to $200 from $220.
Technical analysis suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator shows a strong selling opportunity.
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