Is Alibaba stock a buy around multi years low?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jan 27, 2022
  • Alibaba stock is offering a buying opportunity.
  • The company appears in a strong financial position to support the uptrend.
  • Analysts are showing confidence in its long-term fundamentals.

Alibaba Group Holding Ltd (BER:2RR) was the biggest loser among internet companies in 2021, but its stock has reversed the trend so far in 2022.

Several factors contributed to its huge share price fall of around 60% in the last twelve months, including regulatory issues. Investors move towards value stocks and slowing sales growth compared to a pandemic year.

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Alibaba stock is significantly undervalued after the 2021 collapse

The Alibaba stock is currently trading around its lowest price in the past five years, following its worst price drop in 2021. However, it is worth mentioning that the Chinese internet giant has performed well since the beginning of this year when compared to the tech-heavy NASDAQ index fall of 14%.

Many market analysts believe the stock has reached the bottom of the selloff and are expecting its price to bounce back in the days ahead.

For instance, Raymond James analyst Aaron Kessler set a price target of $200 for Alibaba with outperform rating, which is significantly high compared to current levels of around $110.

Kessler noted that Alibaba could be the winner in the Chinese e-commerce market amid its solid long-term fundamentals, focus on fast-growing areas like cloud, and attractive valuation.

The company also appears strong when it comes to revenue growth trends. Its revenue grew 33% year over year in the September quarter. A pandemic-related increase in demand in the past two years made comparisons more difficult, but the company still expects revenue growth of double-digits in the coming quarters. For the full fiscal 2022, revenue is anticipated to grow 20% to 23% year-over-year. 

Shares hit the bottom of the selloff

Source – TradingView

Alibaba stock price performance so far in 2022 confirms that investors are buying Alibaba shares after the recent dip. This reflects confidence in long-term fundamentals.

Final thoughts

Alibaba is one of the most prominent e-commerce platforms with a large user base. The company’s growth strategies as well as its strong balance sheet will help it to deal with regulatory challenges and weather difficult times. The stock is currently trading at an attractive valuation and is a great opportunity for new investors.

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