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Alibaba Bounces Back: Now What?
In the last month, Alibaba (BABA) rose by around 7.4%. Selling pressure likely ended after investors booked capital losses in the last year. From here, BABA stock, which has the biggest market capitalization among the China-based stocks listed on American markets, may rise.
Alibaba's upcoming earnings report will include the all-important 11.11 single's day event. Furthermore, the company already forecasted sales growth in the low 20% range. This leaves room for Alibaba to exceed expectations.
DiDi's (DIDI) de-listing from US markets is another positive catalyst. Alibaba already trades on the Hong Kong exchange. If BABA stock delists, it would remove the discount overhanging the stock. Shareholders will benefit as Alibaba trades only on the Hong Kong markets.
Next month, China will host the Winter Olympics. Though the Covid lockdown is disrupting the economy, modest foreign visitors may lift domestic spending in the region. This would indirectly help Alibaba's shopping activity. More importantly, the government will focus on Olympics activities. Chances are high that it will not issue any new harsh regulations or penalties against Alibaba. With no bad news, BABA stock has room to bounce back from here.
Alibaba is still out of favor in the medium term. The Chinese government is scrutinizing every aspect of Alibaba's business. Alibaba may overcome the crackdown as it grows Alibaba Cloud and the e-commerce business.
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