Alibaba Group Holding Limited (NYSE:BABA) growth prospects remain strong as it moves further into its post-Jack Ma era

Alibaba Group Holding Limited (NYSE:BABA) growth prospects remain strong as it moves further into its post-Jack Ma era

Alibaba Group Holding Limited (NYSE:BABA) growth prospects remain strong as it moves further into its post-Jack Ma era

Shares of Alibaba BABA have climbed over 7% in the last month as the Chinese e-commerce firm prepares to release its September quarter earnings results on Friday, November 1. Alibaba stock has been volatile over the past two years. Nonetheless, Alibaba’s growth prospects remain strong as it moves further into its post-Jack Ma era.

Alibaba Overview

Alibaba operates the two largest e-commerce platforms in China, Taobao and Tmall. The firm’s core commerce business accounts for roughly 90% of total company sales, which jumped 42% last quarter. Investors should note that Alibaba reports its metrics in Chinese RMB and then offers a comparable U.S. dollar equivalent for the “convenience of the reader.” Therefore, some of our percentages and estimates will be different based on currency fluctuations.

Last quarter, Alibaba’s annual active consumers on its retail marketplaces reached 674 million, up 20 million from Q4 2019 and 98 million from the year-ago period. Plus, mobile MAUs on its China retail marketplaces climbed by 121 million from the year-ago period to reach 755 million.

Alibaba reportedly controls roughly two-thirds of e-commerce market share in China. Yet, the firm, much like its U.S. counterpart Amazon AMZN, has expanded its logistics business in order to grow outside of markets such as Beijing and Shanghai.

The Hangzhou, China-based firm has ramped up its efforts to reach consumers beyond major markets that have become highly saturated as it competes alongside rivals like JD.com JD. In fact, Alibaba said last quarter that 70% of its new customers live in less-developed areas.

Along with e-commerce, Alibaba has expanded its cloud computing business. The unit surged 66% last quarter to account for 7% of total quarterly revenue.

Meanwhile, Executive Vice President Joseph Tsai has discussed recently how Alibaba plans to benefit from the transition to 5G. Along with e-commerce and cloud computing, BABA runs a digital media and entertainment unit that accounted for 5% of sales in the June quarter and could become more important in the Netflix NFLX era.

Outlook & Earnings Trends

Looking ahead, Alibaba’s quarterly (Q2 fiscal 2020) revenue is projected to jump 34.9% to reach $16.72 billion, based on our current Zacks Consensus Estimates. The company’s full-year fiscal 2020 revenue is then projected to climb nearly 33%, with 2021’s sales expected to climb 32.2% higher than our current-year estimate.

Alibaba’s adjusted quarterly earnings are expected to climb 10.7% from the prior-year quarter to hit $1.55 per share. Alibaba’s full-year fiscal 2020 EPS figure is expected to pop 24.5% with 2021 projected to come in 25% stronger.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 189.38.

The projected lower bound is: 168.15.

The projected closing price is: 178.76.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 7 rising windows in the last 50 candles–this makes the current rising window even more bullish.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 77.5046. This is not an overbought or oversold reading. The last signal was a buy 3 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 58.09. 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 58 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 148.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 6 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 10 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed up 4.370 at 178.680. Volume was 24% above average (neutral) and Bollinger Bands were 19% narrower than normal.

Open     High      Low     Close     Volume___
176.590 179.640 176.590 178.680 3,646,096
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 173.73 172.99 171.96
Volatility: 41 39 37
Volume: 2,206,257 2,424,033 3,226,933

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 gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
ALIBABA GRP ADR is currently 3.9% 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 6 periods.

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