With a $46 billion loss over the previous three weeks, rising bearish bets on the e-commerce giant’s stock and declining earnings predictions imply the slide can continue. Chelsey Tam, an equities analyst at Morningstar Asia Ltd., said, “The surge in share prices has been enormous, and there is now some profit taking coming into earnings.”
Investors were obsessed with Alibaba during the reopening boom, which saw its American depositary receipts soar by over 90% in the three months ending on January 26. Now, though, the mood is changing. According to US regulatory filings, hedge funds increased their holdings in Alibaba last quarter more than they did in any other US-listed stocks. A 40% increase in share prices over the following 12 months is predicted by consensus target prices.
The Tech Giant
According to estimates gathered by Bloomberg, Alibaba’s sales probably increased 1.4% year over year in the most recent quarter, a long cry from the company’s heady expansion days. The gross margin increased to 39.2% from 36.7% the previous quarter likely as a result of cost-control measures. From a high in December, analysts’ projections for forward profits per share have decreased by more than 6%.
The software giant is scaling back its plans for international growth and concentrating more on key industries like cloud computing and online retail.
- $46 billion loss over the previous three weeks.
- The gross margin increased to 39.2% from 36.7% the previous quarter likely as a result of cost-control measures.
- The next phase of the reopening surge will be driven by corporate fundamentals and economic recovery.
According to a person familiar with the situation, Alibaba last week sold off the final of its shares in Indian finance behemoth Paytm, speeding a pullout from the fastest-growing mobile and internet market in the world.
According to Minyue Liu, investment strategist for Asian and Greater China stocks at BNP Paribas Asset Management, “the next phase of the reopening surge will be driven by corporate fundamentals and economic recovery.” “Market has been fairly volatile since we have yet to see earnings becoming better.”
Even after last year’s dramatic selloff, the relative level of US tech equities still appears high over the long term. In comparison to the S&P 500 Index, the Nasdaq 100 Index isn’t too far off historical highs and is still trading close to the peak that corresponds to the burst of the dot-com bubble.
The tech-heavy gauge experienced its worst decline since the global financial crisis of 2008 last year, falling 33%, but has recovered 13% this year on hopes that the Federal Reserve may halt the rate of rate increases.
