Why Alibaba stock is rising and the next price target

on Jan 9, 2023
  • Alibaba stock rose by 8% on Monday after reports of Jack Ma's exit of Ant Group
  • The stock has been on an uptrend as the Chinese regulatory crackdown eases
  • BABA could maintain the uptrend to find resistance at $120

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Alibaba Group Holdings Ltd (OTCMKTS:BABAF) traded higher by 8.66% in Hong Kong on Monday on positive tech news. According to the latest stock market reports, Alibaba founder Jack Ma had agreed to relinquish his control of the embattled Ant Group. The latter was at the centre of a scuffle in 2020 following China’s regulators’ suspension of a blockbuster IPO. The move was believed to be inspired by the need for a corporate governance overhaul.

Ma’s decision to step down is positive, as Alibaba has been at the centre of Ant’s woes. Investors see the move as a step forward in curtailing the frequent regulatory attacks against the tech giant. Following the positive development, Jefferies raised Alibaba’s stock target. The analysts expect positive momentum from competitive pricing in China and quality service.

But aside from Alibaba’s specific news, investors were also excited by the prospect of easing crackdown on the Chinese tech sector. A Bloomberg report suggested that a Chinese Central Bank official indicated that the longstanding clampdown was nearing an end. Similarly, Morgan Stanley’s note on January 8 indicated that the Chinese regulatory environment was easing. The strategists expect Alibaba to outperform Chinese big tech stocks.

BABA maintains uptrend amid easing regulatory woes

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BABA Stock Chart by TradingView

A technical outlook gives Alibaba stock a $120 target in the short and medium term. The stock has been on an uptrend since touching a low of $60. The RSI is within the overbought zone, potentially suggesting short-term corrections are on the horizon.

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Is BABA good for investing now?

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Investors should hold BABA stock to the resistance zone. The current momentum seems unlikely to stop amid the positive developments.

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If considering buying BABA, we recommend doing so on a possible correction for a better risk and reward ratio. Alternatively, BABA can be bought if it breaks above the $120 barrier.


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