2021 is the year that Alibaba (NYSE:BABA) shareholders would like to forget. This Chinese tech giant’s ADR (American Depositary Receipt) continues to trend lower, crafting lower lows.
It’s worth noting that Alibaba’s ADR has lost about 49% of its value year-to-date. Moreover, it is down over 53% over the past year.
Moderation in its growth rate due to the macroeconomic slowdown and intensifying competition weighed on Alibaba stock. Furthermore, heightened regulatory concerns led investors to dump Chinese tech stocks.
What to Expect Now?
The weak macroeconomic conditions and increased competitive activity prompted management to lower its full-year sales growth target. Alibaba now expects revenues to increase by 20-23% in FY22, lower than its earlier growth forecast of 30%.
Notably, investor and hedge fund sentiment remains negative about Alibaba stock. TipRanks’ Stock Investors tool shows that 5.9% of investors holding portfolios on TipRanks cut their exposure to Alibaba stock in the past month.
Further, TipRanks’ Hedge Fund Trading Activity tool shows hedge funds sold 1.1 million Alibaba shares in the last three months.
Citing the competitive landscape, John Choi of Daiwa lowered his price target on Alibaba stock to $170 from $195. However, Choi has a Buy rating on Alibaba.
Along with Choi, Elinor Leung of CLSA maintained a Buy rating on Alibaba stock. Leung views Alibaba’s valuation as “Cheap.” Further, the analyst sees its cloud offerings as the next growth catalyst.
It’s worth noting that Alibaba’s cloud computing revenues increased by 33% during the last reported quarter. Alibaba’s proprietary cloud technology and investments in new product offerings augur well for growth.
Wall Street’s Take
Besides Choi and Leung, the majority of analysts maintain a bullish view about BABA stock. On TipRanks, Alibaba sports a Strong Buy consensus rating based on 22 Buy and 3 Hold recommendations.
Further, due to the recent selling, Alibaba’s stock forecast and price targets on TipRanks show solid upside potential. The average Alibaba price target of $203.65 indicates 71.6% upside potential to current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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