UBS Analyst: We Think People Should Be Buying Alibaba's Shares Here

Alibaba Group Holding Ltd BABA shares have tumbled more than 7 percent in the last 5 days over recent reports of fake listings on the website and are down more than 25 percent in the last 3 months. However, a lot of analysts consider this slump as a buying opportunity for investor.

Among them is UBS managing director Eric Sheridan, who has a Buy rating on the stock. Sheridan was on CNBC Wednesday to explain why he is bullish on the stock.

Buy BABA

"We think people should be buying the shares here," Sheridan said. "A lot of what has happened over the last one to two months is that some of the optimism from the IPO has worn off as likely happens with a lot of technology IPOs."

"We are now into the more of the blocking and tackling part of the Alibaba story. We believe growth is still going to be good, we think it's reasonably valued against growth here on a going forward basis and as a result of that, we will be buyers of Alibaba right here."

Focussed On Fixing Things
Sheridan was asked what he thinks about the recent reports highlighting the fake listings and volumes on Alibaba. He replied, "Since the IPO there has been a lot of things that has been highlighted via the prospectus and going forward about what happens at Alibaba as a marketplace, really where people meet each other to exchange goods and money online."

He continued, "There's a lot of things you can do to control people coming into that environment, there are some things you have to learn as you go and correct that behaviour. What we believe Alibaba is doing and it's highlighted by their conversation with the Chinese government as they have said it publicly that Alibaba is very focussed on fixing things as they come to light in their marketplace."

"It frankly is no different than some of the growing pains eBay went through in the early days of its marketplace," Sheridan remarked.