- Fundamentals:
BABA has been underperforming (in comparison to US companies positively affected by the COVID 19)
- Potical uncertainties (trade war), Chinese companies scandals (ex. LK), have deterred BABA from making all time highs, unlike Amazon.
- These factors cause low multiples.
- Healthy company, with strong growth. Big player in AI/Cloud, where gold mines of the futures lie.
Technicals:
Amidst legislation that would allow delisting of Chinese companies yesterday, stock fell, but quickly regained.
High volume buys yesterday suggest current level is attractive.
Earnings:
- highly likely to beat, by a large margin - more buying should ensue.
- Price unlikely to fall much regardless of market reaction to guidance.
- Given likely a large upward move, and an unlikely drop after earnings, $220 is a great price to buy.
- Worst case scenario: price fails to break $220 on earnings, close out even or at a very small loss.
$220 is a level that will unlikely to be revisited if BABA breaks upwards.
Price Target: $380 -$460
Trade closed manually:
Alibaba beat earnings. Political uncertainties magnified by news today. 212 to 200, a 6% loss.
Comment:
BABA still considered a good long term play.