Alibaba Stock Is Rising; Although MS Predicts a “Softer Rebound” Due to Sluggish Consumer Spending

Alibaba Stock NYSE:BABA

Alibaba Stock (NYSE:BABA)

Alibaba stock went up on Friday after the investment company Morgan Stanley predicted a “softer rebound” for the Chinese internet giant. Alibaba (NYSE:BABA) Customer Management Revenue is anticipated to go down in the second quarter, and merchant sentiment is still not particularly positive.

Gary Yu, an analyst, stated that although gross merchandise volumes increased in July compared to May and June, there’s likely only “limited improvement” in August, and September most likely saw pressure. Even though July gross merchandise volumes increased compared to May and June.

You stated in a letter to clients that “We anticipate GMV to fall 2% [year-over-year] in [second-quarter] from a mid-single-digit decline in [first-quarter],” while simultaneously decreasing his price target from $140 to $110.

Weaker merchant sentiment may continue to affect the take rate. As a result, there may still be a gap between [gross merchandise volume] and customer management revenue growth. However, this gap should narrow from quarter to quarter due to fewer order cancellations.

In early Friday trading, the Alibaba stock price rose by more than one percent, reaching $80.40.

Yu anticipates that Alibaba (NYSE:BABA) will achieve a 3% revenue increase to 207 billion RMB during the second quarter. This growth will be driven by decreased CMR and cloud revenue. On the other hand, adjusted EBITA is anticipated to have a substantial rise of 16% year-over-year, reaching 32.6 billion RMB due to continuing operational savings.

Yu noted that Alibaba’s (NYSE:BABA) operating efficiency is likely to “support near-term earnings amid macro uncertainty.” At 10 times adjusted 2023 earnings, Alibaba’s stock valuation looks “attractive.” However, this is still a road to recovery hampered by broader macro issues.

Citi modified its projections on Alibaba stock on Thursday, saying that the business has improved its operational efficiency but that a decrease in consumption due to an increase in COVID-19 cases and accompanying lockdowns may affect sales.

Featured Image- Megapixl @ Drserg

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