Slacking Alibaba Stock Suffers Another Round of Bear Notes

However, short-term speculators are more call-heavy than usual toward BABA

by Emma Duncan

Published on Oct 10, 2018 at 9:40 AM

Chinese internet stock Alibaba Group Holding Ltd (NYSE:BABA) is taking a hit in early trading, after suffering no fewer than three price-target cuts from analysts. Most notably, both Morgan Stanley and Raymond James cut their respective price targets to $220 and $260, with the latter citing online sales and near-term due to negative macro forces playing out in China. Elsewhere, Barclays dropped its own price target to $210. In response, BABA is down 2.9%, at $142.68.

Alibaba stock has been struggling on the charts this year, specifically seeing significant losses after a June 25 bear gap, and founder Jack Ma's exit from his position as chairman. In fact, last night the stock closed at a more than one-year low, and at last check has shed roughly 15% year-to-date. Also pushing the shares lower has been the 30-day moving average, a trendline that has been a ceiling of resistance for the stock since its aforementioned bear gap.

Despite its long-term underperformance, overall analyst sentiment remained optimistic coming into today. Specifically, all 18 covering firms sport "buy" or "strong buy" recommendations, and BABA's average 12-month price target of $227.05 comes in at a whopping 55% upside to current levels.

Echoing this optimism is the Schaeffer's put/call open interest ratio (SOIR) of 0.61, which ranks in the 20th percentile of its 12-month range. This indicates that short-term speculators are more call-heavy than usual toward the stock.

Lastly, short interest on the security has fallen 2.8% during the past two reporting periods, and now represents a healthy 11.5% of the stock's total available float. In other words, at Alibaba stocks' average pace of daily trading, it would take shorts less than four days to cover their bearish bets.
Signal Says Take Profits on This Pharma Stock
The shares are testing a familiar ceiling on the charts
What to Make of the S&P Death Cross
It's the index's first death cross in nearly three years
2 Tech Stocks That Could Fade Into the New Year
Tech stocks have been under heavy scrutiny in recent months
From Schaeffer's Pro Traders
Weekly Options Secrets Revealed

Direct from our Schaeffer's traders, your FREE guide to winning with weekly options!


Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Shortcut to Earnings Season Profits
A free tool can help traders bank big this earnings season.
2 Stocks Making Big Moves on Government Buzz
YRC Worldwide is being sued by the DoJ
Goldman Sachs Cools On WBA Stock Ahead of Earnings
The analyst downgraded Walgreens stock to "sell"
This May Be the 21st Century "Oil Boom"
U.S. production of lithium is set to increase 1,300% in the next 2 years.