Somewhere at the beginning of November I told you that you should dump your (BA)(BA) shares, because this stock is Titanic in making. It was obvious that CCP (Chinese Communist Party) is after the best known Chinese entrepreneur. And the latest news confirmed my thoughts. But this is all old news now, and you are here to find out- what now?
While Alibaba bulls managed to push back (BA)(BA) stock price from $215 to $235, things may turn the other way again if this trend stalls. If you bought at $215 you are still in a pretty good spot because IMO this is a fair price for Chinese internet giant.
As I said things are still not looking great for the Alibaba stock price right now. Because the important 200-day simple moving average line was undercut with speed. Many investors use this indicator to make buying decisions. It is good that the rising trend line, which has been active since the beginning of 2019, has held. It is important to continue to defend this trend line ($220).
Below is a trend analysis for the Alibaba stock. For this purpose, the statements from various trend indicators are used.
Highest High value indicator: Now it is checked whether new high points arise. Because higher highs indicate an upward trend. Out of a total of 10 Highest Highs, only 4 are increasing. That can be described as bearish.
Lowest Low value indicator: A check is now made to determine whether higher lows arise. Because higher lows indicate an upward trend. Out of a total of 10 Lowest Lows, only one is increasing. That can be described as very bearish.
The daily low on Wall Street at $211 also marked the lowest level since June 2020. (BA)(BA) stock went down from the October high of $319 and the loss in market cap at that time was more than $300 billion.
The negative factors that have afflicted the e-commerce giant are not over with the recent increase and will initially continue in 2021. In addition to the pressure from regulators, there are the difficult political relations between China and the USA, the new legal framework for accounting for foreign companies listed on the US stock exchanges and of course the dispute over Alibaba’s Ant Group.
On the other hand: The Communist Party aims with its conditions to curb the power of the big tech companies. However, Beijing is unlikely to be interested in demolishing its fast-growing and innovative flagship industry. Investors should keep this in mind.
It is also unclear at the current time how the various government measures and requirements will economically affect Alibaba. For the final 2020 quarter Alibaba analysts expect an average increase in sales (YoY) of 35%, and EPS is expected to go up by 17.5 percent.
Out of of 64 analysts who cover the company, 63 recommend the share as a buy (one analyst suggests HOLD). The average analyst target price is around $100 above the current price level. This means that you should buy (BA)(BA) stock if you trust analysts.