There isn’t much optimism in the stock market these days. But there’s one stock that has been picking
up steam of late, and that’s Chinese tech company Alibaba Group Holding (NYSE:BABA). In just the past
month, the stock has skyrocketed an incredible 35%. This comes as the S&P 500 has continued to
struggle, falling by 1.6% during the same period.
The momentum has been strong enough to create a bullish crossover, with the stock’s 20-day moving
average (MA) crossing above its 50-day MA. As of the end of last week, the 20-day MA was at $103.37
versus $95.19 for the 50-day MA. Alibaba’s stock remains down 45% over the past 12 months, and this
could be a sign that the long-overdue recovery for the tech giant may finally be taking place.
With China ending COVID-19 lockdowns recently, the economy could be in the midst of a reopening that
helps Alibaba and other Chinese-based businesses do well later this year. Sales through the first three
months of 2022 were up just 9% year over year for Alibaba, and the company’s net loss more than
doubled from the prior-year period. Alibaba did note that its business was greatly impacted due to rising
COVID-19 case numbers. And so it stands to reason that next quarter will likely be an underwhelming
one for the business too.
However, with some light at the end of the tunnel, Alibaba could be in great shape to perform much
better in the second half of 2022. At a price-to-sales multiple of 2.4, the stock has never before traded at
such a low multiple (outside of this year) and it could make for a great buy today.