Wall Street equities are recording the first back -to -back gains after a month of losses. Stocks are trading higher as the markets respond to the extraordinary moves made by the Fed and fiscal stimuli.
The recent bloodbath on Wall Street first hit China on February 3. On that day stocks from the Asian manufacturing giant recorded the worst day of trade as the coronavirus epidemic swept through the populous nation.
On the first day of trade after the extended Lunar New Year Holiday, the Shanghai Composite plummeted by 7.7% in a day while the Shenzhen Component plunged by 8.5%. The fall in shares wiped out a massive $445 billion from the market in a day.
This was the worst day in trade for the Shanghai Composite since August 2015’s “Black Monday”.
The Amazon of China, Alibaba, survived the falling markets much better than most stocks in the travel, hospitality, and manufacturing industries.
Alibaba shares (NYSE: BABA) had had a great close to 2019, showing increased gains in earnings and revenue that topped most forecasts from analysts. In the three months to December 31, the online retailer’s earnings rose by 50% compared to the same period in 2018.
As stock prices plunged in Asian markets in February, the Alibaba share price dropped by 2%, as Daniel Zhang, the company’s CEO sent out a warning that the epidemic was a “Black Swan Event” that would affect China’s and the global economy at large.
Alibaba Stocks Are Undervalued
While Alibaba had a successful end to 2019, the protracted US-China trade war affected its revenue.
The trade truce between the two nations in early 2020 was expected to boost the online retailer stock sentiment. The tariff war between the two world’s largest economies had gripped BABA stocks with bearish sentiment, forcing a low price growth in the earlier months of 2019.
The emergence of the COVID-19 virus put Alibaba’s gains in jeopardy, but the online retailer kept a firm grip on the market. Its share price has rebounded as the government of China encourages its citizens to shop online as the country battles the novel virus.
Investors that took advantage of the slight dip in Alibaba stocks made a good bet and bought the assets at slightly lower prices.
The giant retailer’s stocks are generally termed as undervalued. The business has attractive micro and macro fundamentals, and there have been predictions that its shares are set to skyrocket.
One prediction by a major public finance firm known as GOV Capital, states the BABA stocks could rise above the $300 mark before the end of 2020. GOV uses Deep Learning algorithms to make price predictions and has warned that BABA could rise to $387 in the next one year.
An investment amount of $100 in Alibaba shares could be worth $140.1 by February next year!
BABA Shares Are Very Bullish
The online retail giant’s share price is bound to rise as its cloud segment attains a $10 billion revenue rate this year.
This massive growth will boost the company’s stock price and cloud segment valuation. There are predictions that the company’s stocks will maintain an overall 20% rise in the next three years. Alibaba’s growth charts are more attractive than Amazon’s are!
The mega-cap stocks are also receiving a huge boost from the business’s other brands. Alibaba has a vibrant food delivery service that has matured after its merger with Ele.me, another food delivery service. The online retailer’s lifestyle app Koubei is also giving Tencent’s Meituan a run for its money. Alibaba also has interests in the entertainment and digital media industry.
The platform’s video streaming service Youku and music streaming platform Xiaomi are a huge hit in Asian markets. The business has signed licensing agreements with Buena Vista International, a Walt Disney unit allowing it to market large amounts of premium content from the content producer.
Alibaba has interests in the live sports streaming industry. As an illustration, Alibaba partnered with China Central Television and streamed the 2018 FIFA World Cup fuelling a Youku subscriber growth rate of 200%. Baba shares are currently at the $193.76 mark and are rising.
In November 2019, they rallied to a $231.14 high, bringing in hordes of investors. The stocks are enjoying a bullish strength line and could only rise higher as the Chinese industries open up business once more.