Are Alibaba's Shares a Value Trap? Persistent Low Growth and Merchant Crowding Issues Persist, Analyst Says
Portfolio Pulse from Anusuya Lahiri
Bernstein analyst Robin Zhu has downgraded Alibaba Group Holding Ltd (BABA) from Outperform to Market Perform, lowering the price target from $130 to $98. The downgrade is due to persistent low growth and merchant crowding issues. Alibaba's shares have traded in a range despite its cheap valuation. The company's large number of active merchants, almost double that of PDD Holdings Inc (PDD), is driving up search costs and putting pressure on merchant ROI. Concerns also exist about the Cloud spin-off due to potential U.S. sanction risk.
June 27, 2023 | 5:32 pm
News sentiment analysis
Sort by:
Ascending
NEGATIVE IMPACT
Alibaba's downgrade from Outperform to Market Perform and lowered price target could negatively impact its stock price in the short term.
The downgrade by Bernstein analyst due to persistent low growth and merchant crowding issues, along with a lowered price target, could lead to a negative sentiment among investors, potentially driving the stock price down in the short term.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEUTRAL IMPACT
PDD Holdings Inc was mentioned in comparison to Alibaba's merchant crowding issue, but no direct impact on PDD's stock is expected.
PDD Holdings was mentioned as a comparison to Alibaba's merchant crowding issue. However, the news does not directly impact PDD's operations or financials, hence no immediate impact on its stock price is expected.
CONFIDENCE 80
IMPORTANCE 30
RELEVANCE 50