Alibaba Group (BABA) is an e-commerce and cloud giant that has grown exponentially since its inception. The company has seen tremendous success and is now one of the world’s leading technology companies. With its recent success, BABA has become a stock that more investors are looking to invest in.
The company has seen a lot of good news recently, such as its eleventh-hour suspension of the IPO of Ant Group, its fintech arm; The “disappearance” of Jack Ma, the flamboyant founder of Alibaba Group; Antimonopoly investigation on its e-commerce practices and the subsequent penalty meted out; and Restructuring of Ant Group such that its finance lending unit is regulated like a bank, crimping its valuation.
Despite these challenges, Alibaba has managed to remain strong and is continuing to expand its operations. The company has seen strong growth in its revenue and earnings, with a 3-year revenue CAGR and a 5-year revenue CAGR above 40 percent. This makes Alibaba a growth stock, despite its current struggles. The company also has plenty of cash, with an EV to net cash ratio at 11.5x compared to 36.6x for Amazon. This makes it a great value stock with plenty of liquidity to survive any potential regulatory changes or geopolitical headwinds.
Despite the current struggles, many analysts still believe that Alibaba has the potential to reach a share price of $1000 per share in the near future. This would be more than four times the current price of the stock. To achieve this, the stock must first return to its previous uptrend and regain its composure. This could be achieved within the next few months, with the current consensus one-year price target for BABA at $295.60, 37 percent above the prevailing price.
There are also other factors to consider when looking at the future of Alibaba. The company has been ranked fifth among “50 stocks that matter the most to hedge funds” by Goldman Sachs’ Hedge Fund VIP List. It is also becoming increasingly popular among fund managers, with many adding it to their portfolios. Masayoshi Son, the CEO of SoftBank Group, has also commented that Alibaba is “a great company, at a low price compared with its fundamentals.”
The company is also forecasted to double its earnings per share to nearly $20 in fiscal year ending March 2026, up from the $10.10 it reported in the fiscal year ending March 2021. If the share price does reach $1000, the P/E ratio would be more than 40 times, which would be a rich valuation. However, given the company’s potential to overcome its current problems and the positive outlook for the company’s future, it is likely that the high valuation will be justified.
Overall, Alibaba Group (BABA) is a great stock to invest in. The company has great potential to overcome its current struggles and continue to expand its operations, while at the same time offering investors a great value stock with plenty of liquidity. The company has seen strong growth in the past, and analysts are predicting the share price to reach $1000 in the near future. For those looking for a great stock to invest in, Alibaba Group is worth considering.
