Alibaba Group Holding Ltd (NYSE:BABA)’s price is beneath the $89 value per share and seems to be more or less stabilized at this spot. The company has seen its stock devaluate by 6% since the opening date and there’s a temptation to short-sell its shares in the hope of ripping some profits. Bloomberg’s Cory Johnson suggests avoiding such risky maneuvers with Alibaba Group Holding Ltd (NYSE:BABA)’s financial instruments.
He supports this opinion with the fact that the company has its upcoming quarter “baked in” as they might intentionally set expectations lower to exceed them in order to Wall Street with this. Then, Alibaba Group Holding Ltd (NYSE:BABA) had a huge influx of liquidity which might serve as a safety vest if something unexpectedly jumps in, thus hedging for the longer run. Meanwhile, making precise predictions about the stock is practically impossible and those that expect spikes anytime soon might be unpleasantly surprised by how the stock price behaves.
“I think that fundamentally this is a very expensive stock right now and it’s a business that’s slowing down in some meaningful ways. Yes, it’s growing, but there are some misperceptions about the stock. For example, there’s a perception that their business outside of China is responsible for a lot of their growth in their future growth,” said Cory Johnson.
He further added that Alibaba Group Holding Ltd (NYSE:BABA)’s share of revenues coming from outside China is shrinking comparably to the money coming into the company from the local market. It may be a sign that it will be tougher to compete with already established companies like Amazon.com, Inc. (NASDAQ:AMZN) or eBay Inc (NASDAQ:EBAY) or that advertising and e-commerce is already functioning properly, deeming Alibaba Group Holding Ltd (NYSE:BABA)’s presence as practically unnecessary.
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