The publication cited several problems that may be causing the stock to continue downward, including growing competition in e-commerce from rivals like JD.com (JD) and a slowdown of China’s economy, as this could put a further dent in consumer spending.
Of course, whether or not you think Barron’s is right or wrong, ahead of this report Alibaba shares have been absolutely brutal in 2015, falling more than 35% year-to-date through Friday. Effective August 01, 2014, Alibaba Investment Ltd, a unit of Alibaba Group Holding Ltd, acquired a 10.193% interest n Singapore Post Ltd.
The article appears to have grazed Alibaba, pushing its stock down $2.08, or 3.2 percent, to $62.60 at the close.
“I feel given the secure tendencies in Chinese language wage progress, job creation and family internet belongings, we consider the shoppers nonetheless have the willingness and the power to spend”, she stated. Yahoo (YHOO -2.9%), whose 384M-share Alibaba stake is now worth $24B, is along for the ride. The report also showed Alibaba’s growth in online transactions grinding to its slowest pace in more than three years.
According to Alibaba spokesman, Bob Christie, the article “contains factual inaccuracies and selective use of information, and the conclusions the reporter draws are misleading”.
Currently, the analyst consensus on Alibaba Group is Strong Buy and the average price target is $92.86, representing a 48.5% upside.
Sent as a letter to Barron’s editor and president Edwin Finn, Wilkinson hits out at suggestions the stock price will substantially drop, that competitors are eating away at its margins, criticism of its financial and operating metrics, and allegations around its diversification into other industries.
Alibaba’s woes since its IPO might have taken a few of the shine off its shares, nevertheless it hasn’t soured Wall Road on the corporate’s long-term prospects. UBS analyst Erica Poon Werkun expects investor sentiment toward Alibaba to rebound after the lock-up is past and as the holiday shopping season gears up, which the bank expects to boost Alibaba sales. The higher price target estimate for the stock has been calculated at $125 while the lower price target estimate is at $80.