Amidst a tempest of challenges, the sails of Alibaba (NYSE:BABA) have been luffing, with a 5% dip in 2024 and a sharp 15% tumble over the past year. The company’s vessel faces turbulent waters: fierce competition, regulatory constraints, and geopolitical tensions are threatening its voyage. Nevertheless, analysts are scanning the horizon, hopeful for a change in wind direction that could steer the e-commerce and cloud computing giant back on course.
A Voyage Through Alibaba’s Recent Results
Recent quarters have been a squall for Alibaba, grappling with headwinds as vast as the China Sea. Rivals like PDD Holdings and ByteDance are making waves, offering allure with bargain-bin offerings, which has slightly keelhauled Alibaba’s fortunes.
Last month, Alibaba weathered the storm, reporting a mixed bag for its fourth quarter of Fiscal 2024. Revenue set sail to RMB221.9 billion, a 7% increase heralded with applause, but the crew saw the net income plunge 86% to RMB3.3 billion, buffeted by investment losses in publicly traded companies.
On a brighter note, the flagship e-commerce business showed signs of life. Revenue from Taobao and Tmall hoisted up by 4% to RMB93.2 billion, an uptick from the 2% growth in the Fiscal third quarter. Beyond the horizon, revenue from Alibaba’s international commerce business surged by 45% to RMB27.4 billion, whilst the cloud division saw a 3% gain to RMB25.6 billion.
Charting Alibaba’s Efforts to Navigate Troubled Waters
Alibaba is busy swabbing the decks, aiming to hoist its business back into the trade winds. Splitting its business into six units was the first order of business last year, contemplating IPOs for each. However, plans to list the cloud unit hit a squall due to U.S. chip restrictions, and the IPO for the Cainiao logistics unit was scuppered by stormy market waters.
Despite the wavering winds of the Chinese economy, Alibaba is focused on overhauling its e-commerce and cloud decks. Services are being fine-tuned, prices lowered to fend off competition and hook customers. Alibaba also sets sail for new waters, investing in its international commerce business to broaden its territory and ensure swift delivery and competitive pricing.
The company has even slashed cloud prices to batten down the hatches and attract business. Harnessing the winds of artificial intelligence, Alibaba is maneuvering towards promising horizons, experiencing triple-digit growth in its AI endeavors in the March quarter.
Is BABA Riding the Wave, About to Capsize, or Anchored Steadfast?
Rob Sanderson, the sage analyst from Loop Capital, has upped his price target for Alibaba to $115, peering optimistically through his spyglass. Despite being ensnared in the “valuation trap of China Internet stocks,” he foresees a reevaluation cresting on the horizon.
Sanderson predicts that steady market share, enhanced monetization, and a resurgence in cloud revenue growth will hoist BABA’s flag higher in the latter half of the Fiscal Year.
With 14 Buys and three Holds, Wall Street collectively forecasts a Strong Buy for Alibaba. The average price target of $103.70 unfurls a potential 41% upside in the company’s journey ahead.
In Summation
Alibaba has been tossed about by swirling gales of adversity, yet most navigators remain optimistic about its prospects to rekindle its core businesses and seize AI-driven opportunities.
Curiously, according to TipRanks’ Smart Score System, Alibaba notches a perfect score of “10,” suggesting it has the potential to outdo the broader market in the long voyage. The stock also garners a Very Positive Hedge Fund Confidence Signal, as hedge funds have been increasing their stake in BABA by 9.6 million shares over the past quarter.