- Alibaba shares fell 3.6% in premarket Friday.
- BABA is down 21% in the last month.
- US inflation data causes stocks to fall on Friday.
- China-US relations are also worrying markets.
Alibaba (BABA) shares lost another 3.6% to trade at $90.80 in premarket Friday on the back of higher-than-expected inflation for the U.S. economy. Personal Consumption expenditure The index (CPE) was hot an hour before the stock market opened in New York. Monthly data for January rose 0.6%, 50% more than the 0.4% expected.
This is significant because the Fed relies on the CPE to measure the state of inflation and the above trend means the Fed is likely to raise interest rates rates taller and longer than expected. NASDAQ futures fell 0.9% after the report.
Alibaba Stock News: US-China tensions aren’t making things any easier
Relations between the US and China caused a large sell-off in Chinese ADRs over the past week. Alibaba shares have fallen 21% in the past month. While this is partly due to China struggling to deliver on its post-Covid “reopening” thesis, as poor Chinese industrial data continues to dampen appetite, more recent reports that China is in talks with Russia to begin supporting its invasion of Russia . Heavy-armed Ukraine is sending chills down the spine of Western investors.
The news emerged recently when US Secretary of State Antony Blinken said that China’s overtures to Russia were troubling. If Beijing’s aid taps are turned on, it would very likely lead to the US imposing economic sanctions on China similar to those imposed on Russia after its invasion of Ukraine a year ago. Large sanctions would likely have a devastating impact on Chinese ADRs in the US market and could also simply lead to a reduction in global GDP.
Alibaba Earnings News
Alibaba on Thursday reported adjusted earnings per share of $2.79 for the latest quarter on revenue of $35.92 billion. Both numbers beat the Wall Street consensus. Adjusted earnings per share were $0.39 higher than expected, and revenue narrowly beat consensus by $40 million.
“We expect a continued recovery in consumer sentiment and economic activity,” said Daniel Zhang, chairman and chief executive, who admitted that covid measures had affected the quarter’s results. “We are focused on supporting the growth of our customers in a competitive environment and sustainable, long-term value for our shareholders.”
Chinese e-commerce sales reached $10.8 billion, while Alibaba Cloud’s revenue reached $3.9 billion. Truist Securities raised its price target on BABA shares from $120 to $130.
Alibaba stock forecast
Alibaba shares were already firmly in a downtrend before the unloved earnings arrived. The only hope for the bulls is for BABA stock to find support at $85.70. This price level has been in effect since October last year. A breakout would send BABA shares plummeting to long-term support at $73.28. The MACD indicator has been in a bearish transition for several weeks and seems unlikely to show any promise in the near future. If BABA recovers, the bulls will not join until at least until in stock clears $105.
BABA Daily Chart
