- DZ Bank AG's Manuel Muehl remained adamant on his sell recommendation on Chinese stocks, including Alibaba Group Holding Ltd BABA, amid hints toward possible ease in the regulatory crackdown.
- Last summer, Muehl was the first to recommend the sell rating on Alibaba and JD.com, Inc JD, signifying higher accuracy than his peers.
- Muehl called the optimism surrounding the possible end to DiDi Global Inc DIDI regulatory woes "a bit premature and highly undifferentiated."
- Muehl did not find any reason to be bullish on the sector following slower revenue growth, margins, and free cash flow reflected in the latest quarterly results.
- Muehl's target price of $85 for Alibaba and $49.5 for JD.com implies a downside of ~20% from their last close.
- China recently released its gaming license approval list, which missed big names like Tencent Holding Ltd TCEHY and NetEase, Inc NTES, akin to the previous list.
- A concrete deal with Washington to prevent the U.S. delisting of Chinese firms, a step-back from anti-monopoly rules, and a notable uptick in consumer confidence and spending can only reverse Muehl's bearish stance on the sector.
- Price Action: BABA shares closed higher by 11.2% at $110.07 on Tuesday.
- Photo via Wikimedia Commons
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