In an article I wrote back in September, I mentioned the fact that Alibaba is facing several pressures due to the Trade war issues and the resignation of founder Jack Ma. Infact, we told our readers that the ideal trade would be to go short and we were in the right!
At the time the price was hovering around the $170 area, has recently crossed over several Moving Averages and it was in the beggining stage of a downward trading channel.
I wanted to look again at this stock following the further declines...
As we can see from the chart, the downward trend continued until $138 however it seems to have been halted by a trend line that was created back in February 2016. This should provide a very interesting entry point as I think the selloff is now over.
Fundamentally, I also think that the stock got very close to a bargain area. It is currently trading with 20 times forward earnings estimates (i.e. forward P/E of 20) after a 30% decline in price. That is a very attractive price to pay for a dominant business which is currently projected to grow its earnings per share by 36% (forward Eps 36%).
What do you think? Let me know in the comments box below!