Alibaba Stock Shoots Higher After Earnings, Buyback News, But Is BABA Stock A Buy Now?


Alibaba's stock rose sharply for the third straight session Wednesday morning after the company reported third-quarter revenue of 260.35 billion yuan, slightly below the consensus estimate of a just over 262 billion. But investors appreciated the fact that Ali Baba (BABA) added $25 billion to its stock repurchase program through March 2027. BABA stock appears to be on sale now, but is Alibaba stock a buy now?




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Sentiment was positive again on Chinese stocks on Tuesday after the China Securities and Regulatory Commission said it would “guide institutional investors…to enter China's stock markets with greater efforts”.

The Shanghai Composite Index closed at its lowest level since 2020 on Monday.

BABA shares also jumped on January 23 following reports that co-founder Jack Ma and his business partner Joe Tsai had purchased BABA shares in recent months.

According to an SEC filing, Tsai purchased $151 million worth of Alibaba stock in the fourth quarter through her family fund Blue Pool Management. Meanwhile, Ma bought $50 million worth of Alibaba stock. Ma stepped down as chairman of the company in 2019 and remains a significant shareholder.

Alibaba came under selling pressure on September 11 after outgoing CEO Daniel Zhang unexpectedly resigned as head of the company's cloud business.

The company announced in June that Zhang was stepping down as the company's chairman and CEO to focus on Alibaba's cloud intelligence unit. In May, Alibaba announced plans to spin off its cloud business into a separate publicly traded company.

In December, the company announced that its CEO, Eddie Wu, would take over its struggling e-commerce business.

Recent gains

Alibaba announced an 18% rise in quarterly profit on November 16, with revenue up 6% to $30.8 billion. BABA also declared an annual cash dividend for fiscal 2023 of $1 per ADS. But sellers hit the stock after BABA announced it was abandoning plans to spin off its cloud unit in light of recently expanded U.S. restrictions on chips.

Sentiment was positive around Alibaba shares on August 10 as Wall Street evaluated the company's latest earnings report.

Adjusted earnings rose 37% to $2.40 per share, well above the consensus estimate of $2.02. Revenue rose 5% to $32.3 billion, above the consensus of $30.7 billion. The revenue growth ended four consecutive quarters of revenue declines.

Alibaba stock soared above its 200-day moving average on July 7 after Chinese regulators fined Alibaba's financial arm, Ant, just under $1 billion. Group.

Chinese regulators halted Ant Group's IPO in late 2020 for failing to meet listing requirements. In April 2021, regulators fined Alibaba $2.8 billion as part of an anti-monopoly investigation. But after three years of regulatory scrutiny, optimism is growing that Beijing is close to ending its crackdown on tech companies.

Alibaba Stock News

BABA stock soared 14% on March 28 following reports that the company was considering spinning off into six separate units.

The company said each company will have the opportunity to raise outside funds and even conduct an IPO. According to the report, the company would likely retain its cloud/artificial intelligence business and giant e-commerce operations.

  • Cloud Intelligence
  • Taobao Tmall Commerce
  • Local services
  • Cainiao Smart Logistics
  • Global digital commerce
  • Digital media and entertainment

Alibaba's stock plunged on April 12 following news that Japanese conglomerate Softbank sold most of its stake in Alibaba. At one point, Softbank owned a 25% stake in BABA, worth over $100 billion.

A day earlier, Alibaba stock reversed lower on April 11 after the company officially joined the artificial intelligence race with the launch of its own generative AI system.

Alibaba said the ChatGPT-like AI system will first be added to DingTalk, Alibaba's workplace messaging app, as well as Tmall Genie, a smart speaker system.

The news comes later Baidu (BIDU) launched its own AI chatbot in April.

But regulatory fears about Chinese stocks like Alibaba have eased. A top Chinese regulator recently said the country was close to concluding its investigations into internet platform operators like Alibaba.

Sentiment was low in Chinese stocks in October after the Biden administration announced new restrictions on China's access to U.S. semiconductor technology, including curbs on exports of certain types of chips used in supercomputers and artificial intelligence. It also imposed stricter rules on the sale of chip equipment to China.

Alibaba shares rebounded sharply in late August last year following reports that Beijing and U.S. regulators were close to reaching an audit and inspection deal.

China/US relations

In late July 2022, the U.S. Securities and Exchange Commission added Alibaba to a list of Chinese companies at risk of delisting for failing to open their accounts to U.S. accounting regulators.

Alibaba stock jumped on June 17, but pared early gains after Reuters reported that China's central bank had agreed to Ant Group's request to set up a financial holding company.

In early November 2020, Chinese authorities suspended Ant Group's $34.5 billion IPO in Shanghai and Hong Kong. Ant Group is the fintech arm of Alibaba. The decision to suspend the IPO came after Shanghai Stock Exchange officials said the exchange would suspend listing due to the company's failure to meet conditions amid changes in the environment regulatory.

Increased regulatory scrutiny has weighed on Alibaba and other Chinese stocks over the past two years. In addition to a strict regulatory environment, Chinese stocks are also facing a slowing economy.

In April 2020, Chinese regulators fined Alibaba $2.8 billion following an anti-monopoly investigation. At the time, it looked like BABA stock was ready to break out of a downtrend. But the stock was denied at its 50-day moving average. It attempted to climb back above the 50-day line in late April, but sellers drove the stock lower again.

BABA stock fell another 8% on Nov. 10 after Chinese regulators announced new draft anti-monopoly rules for Chinese online platforms like Alibaba and JD.com, among others.

Fundamental Analysis of Alibaba Stock

The company has a five-year annualized earnings growth rate of 8%, although the fundamentals have weakened significantly in recent quarters.


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Alibaba's composite rating of 66 (on a scale of 1 to 99, with 99 being the best) has fallen, in part due to lagging price action in recent months.

But an annual return on equity of 14% helps give Alibaba a respectable SMR (sales + margins + return on equity) rating of B. Checking ITN stocks (on a scale of A to E with A at the top).

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According to Zacks, Alibaba is expected to earn $8.80 per share in its current fiscal 2024, up 11% from fiscal 2023, with growth slowing a bit in fiscal 2025, up by 3% to $9.10.

Click here to the group's highest-rated stocks.

Alibaba Stock Technical Analysis

Alibaba's relative strength line is trending sharply downward after several months of underperformance versus the S&P 500.

A stock's relative strength line, found in daily and weekly charts on Investors.com, compares the stock's daily price performance to that of the S&P 500. An ascending RS line means the stock is outperforming the S&P 500. A descending line means the stock is outperforming the S&P 500. The stock is lagging the S&P 500.

Alibaba's accumulation/distribution rating improved to B+, helped by higher volume gains in recent days.

BABA Stock: Is It a Buy Now?

Overhead supply issues remain a concern for Alibaba stock, with the stock more than 30% off its high.

Alibaba stock broke above its 50-day line on Nov. 15 and closed near its session high, in an overall strong day for Chinese stocks. Normally this would have been a buy signal, but BABA's 200-day moving average at the time around 89.50 was a potential resistance level to watch.

Alibaba stock has started to come down from its lowest levels and is trying to break out of a downtrend with BABA back above its 50-day line. With sellers dictating the action since early August, Alibaba stock is not a buy. But a move above the 20-day line, currently around 84, would be enough to break BABA stock out of its latest downtrend.

Follow Ken Shreve on Twitter at @IBD_KShreve for more market news and analysis now.

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