Alibaba Stock Is Surging. 5 Reasons Investors Are Buying the Dip.


shares have had an excellent week because the stock looks cheap and investors are buying the big dip.

After losing almost 50% of its value in 2021—amid intensifying regulatory pressures and concerns around slowing growth—shares in the Chinese tech giant have climbed more than 9% since the start of 2022. That surge comes even as peers in U.S. tech have tumbled alongside rising bond yields and indications of tightening monetary policy.

That outperformance was on track to continue Friday, with the U.S.-listed stock of Alibaba (ticker: BABA) finishing up 2.5%. The company’s Hong Kong-listed shares (9988.H.K.) surged 6.5% in Asian trading.

Danny Law, an analyst at Guotai Junan Securities—one of China’s biggest investment banks—told Barron’s he sees five factors behind the recent turnaround for Alibaba. In short, investors are buying the stock because it may have finally hit rock bottom.

Current valuation is the first reason cited by Law for Alibaba’s recent outperformance. It’s looking cheap, especially because the company is a clear market leader in Chinese e-commerce.

Sentiment around valuation in Chinese equities more broadly has been echoed by strategists at Goldman Sachs. “Are valuations really attractive? Yes,” wrote a group led by Kinger Lau in a report. “Index valuations (12x) are at recent-year lows and at significant discounts to global equities.”

Law also said that the move into Alibaba by high-profile fund managers—like

Berkshire Hathaway

(BRK.A and BRK.B) Vice Chair Charlie Munger—was catching the eye of other investors, who were following suit. Munger’s Daily Journal (DJCO) recently doubled down on Alibaba stock for the second quarter.

The regulatory picture, which dogged Alibaba last year, also seems to be getting clearer, Law said. Alibaba and other Chinese tech giants found themselves on the wrong side of regulators as President Xi Jinping tightened his control over China’s…


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