Alibaba Group Holding Limited (NYSE:BABA) Stock at a 20% Discount, Rare Opportunity for Investors!

Alibaba Group Holding Limited (NYSE:BABA) Stock at a 20% Discount, Rare Opportunity for Investors!

Alibaba Group Holding Limited (NYSE:BABA) Stock at a 20% Discount, Rare Opportunity for Investors!

Alibaba (NYSE:BABA) stock rose 1.68% to $194.48 on Tuesday. Notably, the company is China’s leading e-commerce company and the country’s top cloud computing provider. Alibaba is also into the package delivery business. Currently, e-commerce is a rapidly growing market in China. Consumers in the country have been embracing online shopping.

Alibaba stock is trading at a 20% discount

Recently, Alibaba stock came under pressure amid the coronavirus crisis. The virus, which started in China, disrupted businesses’ economic and operating environments. The coronavirus sparked a panic sell-off in company shares, including Alibaba. At the closing on Tuesday, Alibaba stock was trading at about a 20% discount to its 52-week peak of $231.

Overall, Alibaba is one of China’s premium technology companies. As a result, a 20% discount on the company’s shares presents a rare opportunity for bargain hunters. Alibaba shares delivered a 55% return for investors in 2019.

China returns to work after COVID-19 disruption

Right now, China has mainly got the coronavirus outbreak under control. Therefore, normalcy is slowly returning to the country, which lifts the pressure off of businesses. Likewise, returning to normalcy bodes well for Alibaba stock. The company derives most of its revenue in China. Therefore, economic weakness in China could drag the company’s financial results.

China’s return to normalcy should revive the advertising demand, which is a major source of revenue for Alibaba. Businesses cut their marketing budgets as they grappled with additional costs stemming from the COVID-19 outbreak.

Alibaba doubles down on China’s package delivery industry

Alibaba is in talks to invest about $1.0 billion for a stake of up to 15% in Chinese courier firm Yunda, according to Reuters. Notably, the company has already invested in several important Chinese delivery companies, including ZTO Express. Therefore, an investment in Yunda would allow Alibaba to increase its exposure to China’s booming courier industry. China’s domestic courier market grew 23% in 2019 to about $105 billion.

Taking part in China’s booming courier market is only one benefit of investing in courier firms. Also, Alibaba will have access to the infrastructure to speed up the delivery of packages to e-commerce customers.

So far, the recent sell-off has left Alibaba stock trading about 2.0% below where it was when the company led the investment in ZTO Express in May 2018.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 201.62.

The projected upper bound is: 203.78.

The projected lower bound is: 169.95.

The projected closing price is: 186.87.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 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 57.1733. This is not an overbought or oversold reading. The last signal was a sell 1 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 44.80. 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 53 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 32. This is not a topping or bottoming area. The last signal was a sell 0 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 4 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -6.920 at 187.560. Volume was 22% below average (neutral) and Bollinger Bands were 36% wider than normal.

Open     High      Low     Close     Volume___
189.500 192.810 185.050 187.560 3,260,576
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 187.01 204.76 188.23
Volatility: 53 55 41
Volume: 4,147,046 4,308,040 3,593,119

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 0.4% below 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 46 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.