Alibaba News + Outlook

Alibaba has been going through ups and lows recently.. thought I will write my own view along with some of the news that I've heard. 

Background

Their first trouble was due to Jack Ma's comment on the Chinese Government.. and many of us thought that was what made the IPO of Ant Financial fail. Their share price in US $BABA plunged to as low as ~USD220.. but eventually reach a high of USD270 when Jack Ma re-surfaced in a very short video. 

The uncertainty revolving around Alibaba is definitely taking a toll on its share price. After reporting stronger-than-expected 37% increment in quarterly sales and plans for its continuous investment in cloud & AI didn't really prop up its share price. 

Progress

What trigger a jump in the share price again was mainly due to the news of Ant Financial settling on a common ground with the Chinese regulators which should allow them to go-ahead with their IPO on certain terms (but these are not revealed yet). Market took it positively! 

During Thursday, Alibaba is also pricing its 4 tranche bond deal (was initially planned earlier until Ant Financials got scrapped) which came about strong in Friday. 

Alibaba priced USD5billion deal across 4 tranches (10/20/30/40 year) with the order book as high as USD38billion (almost 8x). It ultimately priced in 30~40bps tight of the initial price guidance (IPT), showing that there's robust demand and support for the company.

The secondary market also reacted positively as the spreads tightened on the back of the news (spread tightened = more demand in layman term). 

Price Target

Nomura shifted their price lower to USD329 from USD338 (Buy Rating)

Raymond James shifted their price higher to USD350 from USD330 (Strong Buy Rating)

Citigroup shifted their price higher to USD345 from USD316 

Truist Financial price target at USD326 (Buy Rating)

Summary

Generally Alibaba business is still solid with or without Ant Financials but if Ant Financials can get going, it will bolster the balance sheet further. 

As of now, I am not holding any Alibaba positions but I did pick up some at the lows of USD221+ and taken profit. 

My view is to look at it and maybe pick up some when I got extra cash on hand and if the price comes down. I view their business resilient with the e-commerce situation. 

What's your take on Alibaba? 

Cheers and have a good weekend!