Alibaba Group Holding Limited (NYSE:BABA) continues to show a higher growth rate than its chief e-commerce rival

Alibaba Group Holding Limited (NYSE:BABA) continues to show a higher growth rate than its chief e-commerce rival

Alibaba Group Holding Limited (NYSE:BABA) continues to show a higher growth rate than its chief e-commerce rival

Alibaba (NYSE:BABA) has continued to report much higher revenue growth than its chief rival JD (NASDAQ:JD). This has increased Alibaba’s slice of the Chinese e-commerce pie.

In the latest earnings report, Alibaba reported 42% growth while JD has shown only 23% growth in Chinese RMB. There is also a big divergence between free cash flow growth of BABA and JD. Alibaba’s FCF is $22 billion in the trailing 12 months while JD’s is only $4.6 billion.

Faster growth and higher market share should improve the bullish sentiment for Alibaba stock in the next few quarters. 

A recent report from eMarketer shows healthy e-commerce sales in China over the next few years. This will give Alibaba a long growth runway. We could also see improvement in margins from Alibaba’s core commerce segment as it gains greater pricing power. Higher profits from core commerce have allowed BABA to successfully diversify into other segments which will improve its moat and give greater growth potential in the future.

Investor Takeaway

Alibaba has shown faster growth rate than JD.com, its chief e-commerce rival. This has led to a higher market share of Alibaba in the core commerce segment. Alibaba’s management has also used higher cash flows from core commerce to rapidly expand other segments like cloud, New Retail, international retail, Ele.me and others. This should help in increasing the moat and improve the bullish sentiment towards Alibaba stock.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 178.08.

The projected lower bound is: 156.15.

The projected closing price is: 167.11.

Candlesticks

A black body occurred (because prices closed lower 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 22 white candles and 28 black candles for a net of 6 black candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 22.7098. This is not an overbought or oversold reading. The last signal was a buy 2 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 41.63. 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 buy 38 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 -184.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 3 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 sell 4 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed up 1.250 at 167.230. Volume was 18% below average (neutral) and Bollinger Bands were 36% narrower than normal.

Open     High      Low     Close     Volume___
170.000 170.000 166.450 167.230 2,879,583
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 175.54 171.84 169.02
Volatility: 46 41 38
Volume: 3,448,794 2,990,721 3,385,079

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 1.1% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 0 periods.

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