Market Overview

Citron Says Alibaba Is 'On Its Way To $250'

Share:
Citron Says Alibaba Is 'On Its Way To $250'
Related BABA
Short Sellers Take $23B Hit As US Markets Bounce Back
Analyst: Singles Day Boosts iPhone XR Sales, But Downside Pressure Remains After Holiday
Trade Truce Shot Clock Keeps Ticking (Wall Street Breakfast Podcast) (Seeking Alpha)

Alibaba Group Holding Ltd (NYSE: BABA) traded up 2.5 percent to the $183 area Wednesday after Citron Research deemed the firm’s total addressable market the most compelling “in the history of the stock market” and targeted a $250 valuation.

“Citron Research believes the most compelling growth story in the market is also the world’s most heavily shorted stock,” Andrew Left wrote in a note, reiterating an 18-month bull position.

By Citron’s assessment, the stock trades at a 40-percent discount to Amazon.com, Inc. (NASDAQ: AMZN), its widely-regarded U.S. counterpart, despite:

  • Claiming 80-percent of Chinese retail sales against Amazon’s domestic claim of 40- to 50 percent;
  • Better empowering small business;
  • Operating with lighter assets;
  • Boasting the support rather than opposition of local government;
  • Growing revenue more than 20-percent faster; and
  • Reporting higher margins without a robust cloud business.

Alibaba also claims opportunity to profit from China’s expected rise in global e-commerce sales, as well as a 33-percent stake in Ant Financial, the world leader in mobile payments. The latter’s calculated $150 billion value is not seen to be priced into Alibaba’s stock.

“The stock has flat-lined for nine months now, despite growing revenue over 50 percent throughout this time,” Left wrote. “BABA’s price-to-earnings multiple has compressed by a whopping 7-times over the same time period and is at its lowest level since early 2017 before the company saw an inflection in business fundamentals. The stock is a coiled spring.”

Alibaba will report its quarterly financials Friday, and Citron expects either guidance and earnings beats catalyzing a run above $200 or a potential buy-in opportunity on lower than expected operating margins. The former is seen more likely considering Alibaba primed the market to lower expectations.

An expected secondary listing in China’s market is also considered a major near-term catalyst.

Related Links:

Trump's $60B Tariff Plan Rattles Markets, Chinese Tech Stocks

Report: Alibaba's Ant Financial Worth As Much As $100 Billion

Photo by Dustin Blitchok.

Posted-In: Andrew Left Ant Financial Citron ResearchAnalyst Color News Short Sellers Movers Trading Ideas Best of Benzinga

 

Related Articles (AMZN + BABA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
QRVOKeyBancDowngrades0.0
SWKSKeyBancDowngrades0.0
CMAB. Riley FBRDowngrades84.0
COFBairdUpgrades101.0
CORJefferiesDowngrades102.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

BofA Says It's Time To Connect With Juniper Networks, Projects Multiple Positive Catalysts

Goldman Sachs To Settle Improper Trading Probe For Nearly $110M