Slacking Alibaba Stock Suffers Another Round of Bear Notes

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

Managing Editor
Oct 10, 2018 at 9:40 AM
facebook twitter linkedin


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.
 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 

300x250 - Banner 3 - v1