Traders Hot for Alibaba Group Holding Limited (BABA) Amid Freeze

Alibaba Group Holding Ltd (BABA) CEO Jack Ma has suspended hiring for 2015

by Alex Eppstein

Published on Apr 29, 2015 at 11:15 AM

Alibaba Group Holding Ltd (NYSE:BABA) is getting smacked today, down 3% at $82.52 on reports of a 2015 hiring freeze. However, short-term option speculators are keeping the faith, with intraday call volume running at 1.8 times the norm.

Weekly options are particularly popular, with possible buy-to-open activity detected at the weekly 5/1 84.50- and 5/8 78.50-strike calls. By initiating these long positions, speculators expect BABA to settle above the strikes by the respective expiration dates.

That confidence is shared elsewhere on the Street. In fact, each of the 23 brokerage firms tracking BABA consider it a "buy" or better. Plus, the equity's average 12-month price target of $106.90 stands at a nearly 30% premium to current trading levels.

However, optimism is potentially misplaced. BABA has tanked this year, sliding 20.6%. What's more, the stock is just 3.1% above its all-time low of $80.03, touched in early March.

These technical struggles may help explain CEO Jack Ma's decision to suspend hiring this year at Alibaba Group Holding Ltd (NYSE:BABA), as the company faces pressure from dissatisfied shareholders. "The purpose is simple: we need to get into formation," Ma said. "I think 30,000 people is efficient."

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