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Alibaba Group Holding stock drops for 4 months now

September 30
10:06 PM 2015

Chinese e-Commerce major Alibaba Group Holding's stock (NYSE: BABA) continued to ease on Wall Street for the fourth consecutive month following the reduction in revenue forecast for the next quarter of the year. Alibaba shares fell 13 percent in September and this continuous skid since May brought down the market value to $75billion. The economy sluggishness is impacting the e-commerce sales. Of late, Alibaba Group is facing cut-throat competition in online sales. Analysts hold the view that lot of uncertainty in store for Alibaba Group in the days to come.

The Chinese economy slowdown is also impacting the country's e-commerce company Alibaba Group Holdings. 12 financial analysts have lowered their forecast for sales revenues of the company for this quarter and next quarter as well following the sluggishness in the economy. Ever since it came out with the largest-ever initial public offering (IPO) in 2014, Alibaba Group has been facing rough weather. 

The slowing economy is impacting the e-commerce sales and it's expected to hit the shopping day of year i.e. Single's Day on 11 November. Single's Day celebration in 2014 generated Yuan57.1bn of sales for Alibaba. Adding to this, the increased competition from JD.com Inc and other e-commerce entities is posing a major challenge to Alibaba Group Holdings. 

Securities companies prefer not to recommend Alibaba stock to investors as many uncertainties are looming over the company. Analysts feel that Alibaba is reaching market saturation in major cities indicating slowing down of the growth of new users for the e-commerce seller.

Alibaba shares fell 1.92 percent on a weekly basis to $58.1. However, investors prefer to buy the stock on declines. The stock witnessed inflow of $141.61 in upticks and outflow of $137.47mn in downticks. The stock dropped by over 10 percent during the last five sessions and over 18 percent in four weeks. Institutional investors hold 21.9 percent in Alibaba Group Holdings.

Alibaba is engaged through technology, services and products in e-commerce segment. It offers PCs, mobile phones. It announced quarterly results on 12 august. The revenues were $3.27bn for the quarter marginally lower than the forecast of $3.43b. Analysts predict that earnings per share (EPS) for the year are likely to be $16.68.

Recently, Sun Trust maintained its buy rating on Alibaba Group. Interestingly, the firm sees a price target of $100 on Alibaba. RBC Capital lowered its target from $105 to $91. Brean Capital maintained its buy call and set the target of $92. 

Alibaba Group Holdings posted encouraging 56 percent growth rate in revenues for past 12 quarters continuously. The quarter ending September could witness single digit lower than Alibaba's previous projections, according to 12 financial analysts. Alibaba is forecast to post the slowest growth since its IPO. Revenues could rise 27 percent to Yuan21.4bn ($3.4bn) in the quarter ending this September. Analysts further say that next quarter revenues are likely to be lower with expected growth of 24 percent. 

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