Alibaba Shares Jump Despite Trump Considering Additional Bans

The equity is up over 44% year-over-year

Digital Content Manager
Aug 17, 2020 at 10:47 AM
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The shares of Alibaba Group Holding Ltd (NYSE: BABA) are up 0.2% at $253.01 this morning, despite an announcement from U.S. President Donald Trump confirming the e-commerce company could be another China-owned business he is considering to ban, besides TikTok. Nevertheless, Third Point took a share stake of 2 million sponsored ads in Alibaba earlier today, and Truist Securities raised the stock 's price target to $242.

On the charts, the security has recovered from its late-March lows near the $169 level. Shares surged back in May, with the 30 and 40-day moving averages containing most of the stock's pullbacks. And while overhead pressure at the $260 mark has kept a tight lid the security in recent weeks, the equity hit an all-time-high of $268 on July 9. Year-over-year, BABA sports a 44.3% lead.

Analysts were majorly optimistic toward BABA coming into today, with all 14 in coverage sporting a "buy" or better recommendation. Meanwhile, the stock's 12-month consensus price target of $286.65 is a 13.8% premium to current levels.

This upbeat sentiment is reflected in the options pits, where calls are all the rage. In the last 50 days, 3.16 calls have been picked up for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than all annual readings, suggesting a healthier-than-usual appetite for long calls of late. 

However, short interest for BABA is down 10.3% in the most recent reporting period. The 37.89 million shares sold short make up 11.6% of the stock's available float, or exactly two days' worth of pent-up buying power.

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