Chinese e-commerce giant Alibaba Group Holding Limited (NYSE: BABA) got some respite from the lingering fears of delisting following a preliminary audit agreement between the United States and China. The good news for BABA stock investors gets even better as the e-commerce giant has been selected among others in the first batch of Chinese companies for audit inspection in Hong Kong beginning in September, per a Reuters report.
The latest breakthrough agreement enables the U.S. audit watchdog, the Public Company Accounting Oversight Board (PCAOB), to audit the working financial statements of U.S.-listed Chinese companies in mainland China and Hong Kong.
The Chinese e-commerce giant has long remained on investors’ radar for facing the risk of getting delisted under the Holding Foreign Companies Accountable Act along with more than 200 other Chinese companies listed in the United States.
Is Alibaba Stock a Buy, Sell, or Hold?
BABA seems like a good stock to invest in. Overall, Wall Street is very optimistic about the stock and has a Strong Buy consensus rating based on 17 Buys and one Sell. However, American depositary receipts (ADRs) of BABA have slipped 22% so far this year.
Similarly, TipRanks data shows that financial bloggers are 78% Bullish on Alibaba, compared to the sector average of 64%.
Contrary to analysts and financial bloggers, hedge funds are apprehensive about Alibaba stock. They have sold 12.8 million shares of BABA stock in the last quarter.
Conclusion: Tough Times Ahead for BABA Stock
Despite the easing regulatory burden, BABA stock remains exposed to macroeconomic headwinds, including supply-chain disturbances, low consumer sentiment levels, and COVID-19 uncertainty. The e-commerce giant faces high political risks, given the volatile relationship between the United States and China and growing tensions between Beijing and Taiwan.
However, BABA holds impressive long-term potential on the back of strong global consumer-facing businesses and spending in its Cloud business. Further, Alibaba stock’s average price target of $156.12 signals that the stock could rise nearly 70% from current levels.