Net income for the quarter fell by around 75%, due in part to a goodwill impairment. And earnings per share of $2.65 were down 23% from a year ago. The average holding in Ark Innovation , Ark Investment Management’s namesake flagship exchange-traded fund, is currently down over 70% from its 5-year high. Predictions about more competition for Tesla are a little like Elon Musk’s predictions for fully autonomous cars.

• The bulls will likely acknowledge all those problems, but they’ll claim they’re transitory and that the company’s stock is too cheap to be ignored.
• Since 2002, Alibaba has launched multiple complementary initiatives like Taobao Marketplace and Alipay to enhance its e-commerce system.
• Alibaba is relatively cheap compared to American e-commerce stocks.
• The variable interest entity structure, which circumvents China’s restrictions on foreign investments in sensitive sectors like technology and education, could also be outlawed.
• Meanwhile, GlobalData expects China’s e-commerce sector to continue expanding at a compound annual growth rate of 11.6% between 2021 and 2025.

Hence, investors sentiment has been unfavourable toward Alibaba shares due to several concerns. Some of these bad news include potential delisting by the SEC and China’s potential involvement in the Russia-Ukraine conflict. According to 54 analysts, the average rating for BABA stock is “Buy.” The 12-month stock price forecast is 188.12, which is an https://dotbig.com/markets/stocks/BABA/ increase of 110.40% from the latest price. If we look past those headwinds, then we’re left with a stock that trades at just 14 times next year’s earnings and 1.3 times next year’s sales. By comparison, Alibaba was valued at about 14 times its fiscal 2025 sales when it listed its IPO shares at $68 for a valuation of $168 billion in Sept. 2014.

Growth & Valuation

Taobao Deals, which offers a direct manufacturer-to-consumer model, will drive user acquisition growth in lower-tier cities. BABA stock price Furthermore, it should appease the Chinese government, which encourages businesses to offer affordable goods.

The scores are based on the trading styles of Value, Growth, and Momentum. There’s also a VGM Score (‘V’ for Value, ‘G’ for Growth and ‘M’ for Momentum), which combines the weighted average of the individual style scores into one score. Visa and Alibaba Group tied by winning 9 of the 18 factors compared between the two stocks. Slowing consumer consumption as a result of slowing economic growth could also hurt Alibaba’s prospects.

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Moreover, the fact remains that despite the risks the company faces, Forex news is cheap in numerical terms. The group fetches a multiple of 12.5 times this year’s expected earnings, a 10% discount to its peers. And the sector as a whole remains beaten-down in terms of valuations. Alibaba Group Holding Ltd.’s Hong Kong-listed share portion rose to 56% from 53% during the same period, the data show.

The stock is undeniably cheap relative to its growth potential, but it will likely remain a value trap until it resolves those messy issues. But as of this writing, Alibaba’s stock has dropped to the low $70s, and it could retest its IPO price. Let’s review the bear and bull cases again to see if Alibaba is becoming a value trap or a value stock. The stock looks very cheap relative to its growth https://www.cmcmarkets.com/en/learn-forex/what-is-forex potential, but it will keep trading at a discount until it resolves its near-term challenges. Alibaba recently boosted its stock buyback program to $25 billion. Alibaba scored a small windfall when GoTo, a Singapore-based delivery service it backed, went public. The initial public offering was the largest ever offering at the time, with the company’s market cap reaching $231 billion.