Alibaba Group Holding Limited (NYSE:BABA) CEO Daniel Zhang warns of a “black swan” event

Alibaba Group Holding Limited (NYSE:BABA) CEO Daniel Zhang warns of a “black swan” event

Alibaba Group Holding Limited (NYSE:BABA) CEO Daniel Zhang warns of a “black swan” event

As China’s largest e-commerce company, it’s not surprising that Alibaba (NYSE:BABA) is concerned about the coronavirus.

Before the bell on Feb. 13, the company reported fiscal third-quarter earnings of $2.61 a share on sales of $23.2 billion. Those figures soundly beat Wall Street estimates calling for earnings of $2.22 on revenue of $22.5 billion. However, analysts know the coronavirus is a credible issue facing any company doing business in the world’s second-largest economy.

“In response to the coronavirus, we mobilized Alibaba ecosystem’s powerful forces of commerce and technology to fully support the fight against the outbreak, ensure supply of daily necessities for our communities and introduced practical relief measures for our merchants,” Alibaba CEO Daniel Zhang said in a statement.

The virus, and how Beijing reacts to it, is beyond Alibaba’s control. Beijing’s heavy footprint in the day-to-day workings of the Chinese economy may be compounding markets’ adverse reaction to the “Wuhan virus” because there are growing doubts about just how accurate the government’s data are.

This is what is available for public consumption. As of Feb. 18 confirmed cases jumped to 73,000 and the fatality rate spiked to almost 1,900.

The Bottom Line on Alibaba Stock

Zhang himself called the coronavirus a “black swan event.” A comment like that from a CEO is sure to dissuade some investors — and the executive was open that results for the current quarter will not be strong.

Still, this is a company that’s set to deliver 20%-plus revenue growth for the next several years. It’s one that has a cloud computing business that posted revenue growth of 62% in the most recent quarter. And it’s one that owns stakes in firms that are worth tens of billions of dollars and are growing at exponential rates themselves.

Investors can get all of that for 20 times free cash flow and 9.3 times sales. Those ratios imply Alibaba is offering growth at a very reasonable price.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 232.00.

The projected lower bound is: 210.12.

The projected closing price is: 221.06.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 56.0755. This is not an overbought or oversold reading. The last signal was a sell 7 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 54.31. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 22 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 40. This is not a topping or bottoming area. The last signal was a sell 2 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 7 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed up 0.890 at 220.520. Volume was 36% below average (neutral) and Bollinger Bands were 4% narrower than normal.

Open     High      Low     Close     Volume___
218.000 220.840 217.520 220.520 2,274,843
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 219.83 214.97 183.05
Volatility: 38 32 37
Volume: 3,583,986 3,322,057 3,582,083

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

ALIBABA GRP ADR is currently 20.5% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of BABA.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BABA.N and have had this outlook for the last 15 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.