JD.com Sales Disappoint; Alibaba Shares Bounce

Short interest keeps rising on Alibaba

Aug 16, 2018 at 10:15 AM
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Chinese internet stocks have been under pressure in recent weeks, and they'll be in focus again today following earnings out of JD.com, Inc. (NASDAQ:JD). Although the e-commerce company's second-quarter results were worse than expected, the shares were last seen flat at $32.37, and just off a fresh low of $31.18.

This underwhelming performance is bad news for recent options traders, who were picking up calls at an accelerated pace. Sentiment is also very bullish in the analyst community, where six of eight covering firms have "strong buy" ratings. JD shares have shed almost 37% since their all-time high of $50.68 from February, touching an annual low of $31.08 yesterday, so we'll see if any analysts decide to cut their outlooks on the underperformer.

While JD.com sinks to new lows, Alibaba Group Holding Ltd (NYSE:BABA) is bouncing from the year-to-date nadir it hit yesterday, adding 2.1% today at $173.39. A "strong buy" reiteration from Raymond James could be helping the stock, though the covering analyst also dropped their price target to $280 from $300 due to potential headwinds from the U.S.-China trade dispute. 

BABA has been a favorite of short sellers for some time, even during the shares' rally to their record level of $211.69 in June. The number of shares held by short sellers increased another 10.6% in the last two reporting periods, putting 11.6% of the total float in the hands of these bearish traders. Going by average daily trading volumes, it would take more than nine sessions for shorts to cover their positions.


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