Amongst the largest losers throughout the recent market selloff, ecommerce stocks have been hit particularly bad. Shipping delays, labor shortages, and cooling investor sentiment following a decent holiday season have contributed to tighter company valuations. Even with the latest bearish price action, Alibaba Group (BABA) is no stranger to selloffs.
The Chinese-based ecommerce giant has been plagued with controversy over the last five quarters. Ant Group’s IPO-initial public offering was cancelled by Chinese regulators, the founder of which happens to be same man heading Alibaba, Jack Ma. From then on, the CEO had been embroiled in a rivalry with his country’s government, potentially what prompted Chinese regulators to target the company for anti-trust violations.
As these incidents unfolded, BABA’s stock price dropped. Now, many analysts remain bullish on its underlying fundamentals, and appreciate the discounted and attractive price.
The difficulty is knowing just how far a stock may fall. Typically, one is not aware until it is too late, after earnings are reported. The retail and technology firm is expected to report its quarterly results this week, on February 2.
For long-term BABA investors, the situation may seem bleak. Shares are down over 56% over the last year, and it is unclear yet if they have found their bottom. However, there is hope. Using TipRanks‘ new tool, we can try and predict upcoming earnings based on user visits to Baba’s websites.
Considering Alibaba’s ecommerce segment is heavily website-centric, its traffic can be used as an indicator of current consumer trends. In this regard, the company is standing strong. Of the current unreported period, total estimated visits are up 23.41%, a tremendously bullish metric. More modestly, total estimated visits are down 6.93% from the same quarter last year.
The previous quarter encompassed the high-volume holiday shopping season, which has surely boosted Alibaba’s numbers. It is possible to infer that the high number of user visits translates into stronger earnings, something for which BABA investors are starved.
The upside for Alibaba is that its ecommerce segment is just one of its many endeavors. The company is also involved with cloud-computing, payment systems, and oversees a large grouping of subsidiaries. The firm is well-diversified against macro fluctuations in ecommerce, which is probably why financial analysts are so optimistic on it.
On TipRanks, BABA has an analyst rating consensus of Strong Buy, based on 20 Buy and 3 Hold ratings. The average Alibaba price target is $190.46, representing a potential 12-month upside of 65.29%. Before market open on Monday, shares were priced at $115.23 a piece, rather close to the stock’s 52-week low.
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