Is Alibaba a buy or sell in November?

Is Alibaba a buy or sell in November?
Written by:
Stanko Iliev
23rd October, 20:46
  • Even with the COVID-19 pandemic, the business of Alibaba is going very well
  • If the price jumps above $320 the next target could be located around $330 or even $350
  • Alibaba invested $3.6B in Sun Art Retail to capture opportunities in China’s retail sector

Alibaba (NYSE: BABA) shares have advanced from $266 above $310 in less than several weeks and the current price stands around $309.

Fundamental analysis: Alibaba continues to dominate the Chinese e-commerce market

Alibaba Group Holding Limited is a Chinese multinational technology conglomerate specializing in e-commerce as the online commerce company with hundreds of millions of users on its Taobao, Tmall and Alibaba.com marketplaces. The current price uptrend of Alibaba which began in early 2019 is still intact and this stock could reach $400 by the end of November according to analysts.

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Even with the COVID-19 pandemic, the business of Alibaba is going very well and the company will have a rise in revenue for the next fiscal year. The company increased its revenue for the 2020 fiscal year to $71.96B from $56.14B in 2019 and the growth projects will ensure that the numbers will be moving up in the future.

The company’s operating cash flow is growing past ten years but Alibaba is investing heavily in its logistic network. With a 62% share in consumer retail commerce, Alibaba continues to dominate the Chinese e-commerce market.

China’s e-commerce market has been growing at a rate of 38.22% and is expected to continue due to rising consumption. This is certainly positive for this company because the explosive growth of e-commerce sales in China will only solidify the position of Alibaba further.

Alibaba invested recently in Swiss duty-free retailer Dufry AG and these two companies will also form a joint venture combining the tech giant’s digital expertise with Dufry’s travel retail business. Alibaba has also invested $3.6B in Sun Art Retail to capture opportunities in China’s retail sector.

It is important to mention that Alibaba faces competition from JD.com (JD), Tencent and Baidu but analysts believe that Alibaba can sustainably maintain its dominant market position. There are some obvious risks when it comes to trading this stock currently but Alibaba’s stability and size will always be attracting potential investors and traders.

Technical analysis: The current uptrend remains intact

Data source: tradingview.com

As long the price is above this trend line this stock is in the “buy” zone and there is no indication of the trend reversal. If the price falls on the trend line and if we get a “bullish” confirmation candle it would be a very good entry point for short-term traders who are trading with “stop-loss” and “take profit” orders.

The trend line represents a very strong support level, if the price breaks this trend line it would be a very strong “sell” signal and we have an open way to $260. Rising above $320 supports the continuation of the bullish trend for Alibaba and the next price target could be located around $330 or even $350.

Summary

Even with the COVID-19 pandemic, the business of Alibaba is going very well and the company will have a rise in revenue for the next fiscal year. The company’s operating cash flow is growing past ten years but Alibaba is investing heavily in its logistic network. At its current share price, Alibaba could be a very good short-term investment but with $828B market cap this stock is overvalued in my opinion.

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