Alibaba (BABA) stock has jumped more than 5.2% in Tuesday’s premarket to $80 after China’s National Health Commission said covid-related lockdowns should end as soon as possible. This announcement sent nearly all Chinese stocks higher as renewed covid lockdowns had pushed these same stocks into a slump over the past several weeks.
Protests across China starting last week and seeming to die down on Monday had also weighed on sentiment, but now it appears that the Chinese Communist Party is listening to protestors’ concerns. If lockdowns do indeed end, then the reopening of trade should ignite even further.
Now Alibaba might have a window of hope to regain its footing after bulls have largely lost interest in a stock that has been greatly hurt by government policies and regulators. The Hang Seng Index rallied 5.2% early Tuesday.
Wall Street’s consensus price target is $137, 71% higher than even the premarket’s elevated price, but BABA stock will require a sustained change in government policy to build back its share price.
Of course, the government has talked about reopening before but always returns to its prior policy after covid cases begin to spike. This time it could be different, however, since China rarely features protests that last for multiple days. These protests were enough to scare Wall Street on Monday as trading houses worried how Chinese production would affect US corporations. Tesla (TSLA) and Apple (AAPL) were stocks in the crosshairs due to their extensive production in China.
Other Chinese stocks like JD.com (JD) and Pinduoduo (PDD), major competitors to Alibaba, are also getting in on the fun. JD.com advanced 6.6% early Tuesday, while Pinduoduo adds 5.4% on top of its Monday earnings surge. Truist Securities and Benchmark both reaffirmed their Buy ratings on Alibaba stock following earnings on November 17 but cut their price targets to $120 and $180, respectively.
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