Nasdaq BABA Alibaba

What happened No doubt about it -- this week has been a good one to own stock in Alibaba Group (NYSE: BABA).

The NASDAQ 100 Pre-Market Indicator is down -80.48 to 15,684.88. The total Pre-Market volume is currently 27,106,585 shares traded.The following are the most active stocks for the pre-market session: Absci Corporation (ABSI) is +2.105 at $8.25, with 10,798,753 shares traded., fo

Most investors understand that a good stock is an even better buy when its price has been lowered. But, it doesn't necessarily hold that a stock with a lowered price is more ownership-worthy than it was before it shed value. Sometimes, the price of a particular company's shares i

A major new revelation struck for Chinese e-commerce great Alibaba (NYSE: BABA).

The revelation in question comes from a major investor who recently hiked their stake in the company substantially. While that investor seems happy to buy in, I'm much less certain myself.

Therefore, I'm shifting to neutral on Alibaba, a company that's looking at a lot of problems, but also a growing slate of opportunities.

Alibaba's year in share price so far has been in a state of generally rapid decline. The company enjoyed a terrific January last year, spending much of it on an upward track.

The party lasted until just after Valentine's Day, when Alibaba began a heartbreaking plunge that lasted until October. While Alibaba posted minor gains in that time, they were often wiped out within days of showing up.

October started a rally for the company, going from around $139 to just over $177 in about two weeks. However, these gains didn't hold, and the company once more started losing ground. Then, the slow slide sped up as Alibaba shares lost $50 in the space between November 15 and December 1. This brings us to the present day, where Alibaba shares hover around $127.

The latest news gave Alibaba a big shot of adrenaline in trading. The news features Daily Journal Corp., which nearly doubled its current stake in the company.

If Daily Journal isn't a familiar name, its current chairman will be. It's none other than Charlie Munger, of Berkshire Hathaway. Daily Journal bought an additional 99.3% of its current holdings, bringing the total share count to 602,060. The current value of Daily Journal's holdings in the firm is around $75 million in today's prices.

Wall Street's Take

Turning to Wall Street, Alibaba has a Strong Buy consensus rating. That's based on 19 Buys and three Holds assigned in the past three months. The average Baba Stock Prediction of $202.70 implies 59.6% upside potential.

Analyst price targets range from a low of $140 per share to a high of $252 per share.

Potentially Worthwhile

Daily Journal's huge new buy in Alibaba made me wonder. After all, we're looking at a company that was coming under fire from Chinese regulators, which are some of the most stringent around.

The company was also looking at some serious issues economically, as a potential slump in China would wipe out a lot of discretionary income. An e-commerce play like Alibaba generally depends on discretionary income to get much of anywhere.

There were also concerns, going back a couple years now, about the potential for Chinese stocks to be delisted from exchanges in the U.S. Such a move would limit the range for these stocks, and with fewer investors, the result would have been significant share price losses.

However, those concerns look to be fading away, as policymakers in the U.S. have little political appetite for cutting off stocks from exchanges right now.

This makes Alibaba and its class much safer investments than they were previously. Plus, Alibaba is trading at a significant low point right now.

For anyone who wants to get involved in a Chinese e-commerce play, this would perhaps be the best time to do it. Munger's move into this stock is almost a personification of the old advice to be greedy when others are fearful, and fearful when others are greedy.

Those hoping to make Alibaba an income play, however, will be sorely disappointed. Alibaba's dividend history reveals that it has no dividends in the pipeline. It also appears to have never actually offered one in the first place.

Concluding Views

This is where investing becomes little more than a gut check. If you believe that the stock can make its way back to levels seen earlier this year, then it's a great time to invest in Alibaba.

Whether you think the current prices have created an opportunity or a danger signal is up to you. I'm shifting my own opinion to neutral, because Alibaba's spectacular bargain pricing stands alongside the dangers it faces in the segment.

That's such a pure balance that it's hard to call it one way or another. Alibaba is a flipped coin that has landed, almost impossibly, on its edge.

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Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.

​Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates.  Read full disclaimer >

What happened Building on gains won through an endorsement by Charlie Munger yesterday, Chinese tech stock Alibaba Group (NYSE: BABA) continued to soar higher on Thursday.

Chinese market regulator The State Administration for Market Regulation (SAMR) said that it has imposed fines on Alibaba Group Holding Ltd. (BABA), Tencent Holdings Ltd. (TCEHY) and Bilibili Inc. (BILI) on the grounds that these companies failed to report several deals, as reported by Global Times.

As per China’s anti-monopoly law, SAMR has charged Alibaba’s subsidiary, Alibaba (China) Network Technology Co, with maximum possible fine of 500,000 yuan ($78,500) for not reporting its acquisition of Chinese supermarket company Xingli.

Similarly, Tencent was slapped with nine such fines for reasons such as failure to report acquisition of an online wine retailing company based in South China's Guangxi Zhuang Autonomous Region and a Beijing-based delivery company. 

Bilibili also witnessed a fine for keeping information related to its stake in a mobile picture editing software company, Versa Inc., from the regulator.

The move comes amid China’s efforts to control illegal activities, and it is likely that the regulator will report more such cases.

Wall Street’s Take

Benchmark Co. analyst Fawne Jiang maintained a Buy rating on Alibaba with a price target of $235 (94% upside potential).

Overall, the rest of the Street is bullish on the stock and has a Strong Buy consensus rating based on 4 Buys and 1 Hold. The BABA stock prediction of $203.20 implies upside potential of about 67.7%.

News Sentiment

News Sentiment for Alibaba is Neutral based on 69 articles over the past seven days. Half of the articles have Bullish sentiment, compared to the sector average of 64%, and the remaining half have Bearish sentiment, compared to the sector average of 36%.

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According to a report published by Reuters, Los Angeles-based publishing firm Daily Journal Corp. (DJCO) has increased its stake in Chinese e-commerce giant Alibaba Group Holding Ltd. (BABA) by almost two-fold.

Daily Journal raised its stake in Alibaba by 99.3% to 602,060 sponsored American Depository Shares as of December 31, 2021, worth around $72 million as of January 4, 2022.

About Alibaba

Apart from e-commerce, Alibaba also offers retail, Internet, and technology services. It provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals. Further, it offers electronic payment services, shopping search engines and cloud computing services.

Shares of the company were trading over 2% up in the pre-market session on Thursday.

Wall Street’s Take

Last month, Daiwa analyst John Choi reiterated a Buy rating on the stock but lowered the price target to $170 from $195 (40.3% upside potential).

Choi said, “Rising competition, uncertainty over user retention over the long run and investor concerns regarding Alibaba's cash burn in new businesses are likely to persist despite better financial disclosure.”

Additionally, Elinor Leung, an analyst with CLSA, maintained a Buy rating on Alibaba with a $250 price target, implying 106.3% upside potential.

Leung said, “AliCloud enjoys unparalleled competitive advantages and a strong technological lead.”

Overall, the stock has a Strong Buy consensus rating based on 19 Buys and 3 Holds. The average BABA stock prediction of $203.20 implies 67.7% upside potential. Shares have lost 46.6% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Alibaba’s performance.

According to the tool, compared to the previous year, Alibaba’s website traffic registered a 10.1% decline in global visits in November. However, the website traffic has increased 1.7% year-to-date against the same period last year.

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China's top market regulator said on Wednesday it has fined units of Alibaba Group Holding Ltd, Tencent Holdings Ltd, and Bilibili Inc for failing to properly report about a dozen deals.

China's top market regulator said on Wednesday it has fined units of Alibaba Group Holding Ltd, Tencent Holdings Ltd, and Bilibili Inc for failing to properly report about a dozen deals.

Daily Journal Corp, the publishing and technology company in which Warren Buffett's longtime business partner Charlie Munger is chairman, said it has nearly doubled its stake in Chinese e-commerce giant Alibaba Group Holding.