When Alibaba (BABA), a China-based e-commerce firm, trended in the $80 - $90 range, the stock could
have moved in either direction next. Fortunately, Alibaba’s quarterly earnings reignited investor hopes
that the worst is behind it.
Alibaba gained nearly 15% after posting Q4 earnings of $1.55 a share on $32.2 billion in revenue.
Revenue grew by 9%. Investors who suffered from BABA stock over several years may forget its past
growth rates. Before China implemented harsh rules against Internet companies, Alibaba grew by at
least 30% annually. Still, the stock lost half its value in the last year, reflecting some of those risks.
Alibaba managed to sustain some growth despite China’s lockdown in Shanghai. This lockdown started
in late March and should have lasted only a week. This extended to over one month. The government
praised officials who achieved zero Covid. It did not care about the economic impact of the policy.
Investors are overlooking Alibaba’s Q2 results, which will show the impact of the ongoing lockdown. As
the city opens up gradually, shareholders expect Alibaba’s e-commerce sales will rebound steadily.
Baidu (BIDU) also posted strong first-quarter results. This helped fuel Alibaba’s rally. Both stocks may
face profit-taking from here. Continue watching Alibaba for signs of its business stabilizing.
