Ahead of its fourth-quarter results, China tech firm Alibaba (BABA) sunk from $120 to below $100. The e-commerce giant posted revenue growing by only 2% Y/Y to $35.92 billion.
Alibaba reported weak results from softer demand stemming from China’s harsh Covid-19 lockdown. The country abruptly ended the policy in Nov. 2022. The soft demand, supply chain, and logistics disruptions are now over. Alibaba may focus on driving growth for its customers from here.
Markets sold the stock on worries that Alibaba will stumble as it navigates amid the competitive landscape.
Opportunity
Alibaba may achieve growth by maximizing opportunities around commerce, logistics, and the cloud. In the next three to five years, the company may renew its growth. It will not seek out new areas to compete. Instead, it will focus on those three core areas.
The company may leverage China’s consumption growth this year. For example, the IMF expects China to grow by at least 5% annually. By extending that growth through the next 10 years, Alibaba’s e-commerce business should thrive. Demand for its technology solutions will grow as digitization on the consumer side and the supply chain continues.
Bottom Line
BABA stock trades in a wide range of around $80 - $125. U.S. and China tensions are hurting the stock today. Wait for those troubles to ease before starting a position in Alibaba.
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