Alibaba (BABA) Stock: Can the BABA Stock Touch $100 in October?

• China’s macroeconomic, regulatory, and geopolitical risks shattered the BABA stock.
• BABA stock decreased by 13% in the past month.
• BABA stock slid 0.75% during the past 24 hours and is trading at $85.54.

Alibaba Group Holding Ltd (BABA) stock slid by 0.75% in the previous intraday session and is trading at $85.54. The price reflects continued weakness in the market. However, shares of several Chinese stocks are trading lower due to the China Evergrand stock suspension in Hong Kong.  

The China Evergrands crisis raised concerns about future economic instability in China. Alibaba, a world-renowned China’s e-commerce and technology sector, could face further economic slowdown if the crisis leads to reduced consumer spending and further sell-off.

The BABA stock price diverted from uptrend momentum after attaining a resistance level of $102.05 on July 31, 2023. It dropped roughly 18% within 2 months. Due to the massive presence of bears at $102, the price slid while following a downtrend trendline. The price action shows that BABA stock is struggling to sustain a higher level of the $100 mark. 

Year-to-date (YTD) and six-month returns of BABA stock reflect opposing results of 6.11% and 16.84%, respectively. The meltdown of Alibaba shares occurred due to investors losing trust in Chinese macroeconomic, regulatory, and geopolitical risks. 

In 2020, Jack Ma, ex-CEO of Alibaba, made a grave mistake by criticizing China’s Financial system. It caused the fall of the Alibaba empire. From 2020, the BABA stock price has gradually declined from the high of $319 to the recent low of $77.

Q2-2023 Financial Report of Alibaba

Alibaba announced a positive 2nd quarter financial report despite the consistent fall of BABA shares. The Q2 consensus was released on August 10, 2023. The reported earnings of $2.395 per share defeated the Zacks consensus estimates of $2.01 EPS by 19.04%.

In the second quarter, Alibaba announced a price cut of 15% and 20% for some of its cloud computing services. However, the company’s total sales in Q2 were $32.28 Billion, surpassing the estimated revenue of $30.98 Billion.   

Will BABA Stock Melt Toward the $80 Mark?

BABA stock price is hovering below the 20, 50, 100, and 200-day EMAs, indicating a rise in sellers’ participation in the market. If the seller involvement increases, the price might melt towards the $80 mark. On the contrary, If BABA stock attracts more buyers and the bullish momentum remains constant, the price might surge towards the $90 mark.

The Relative Strength Index (RSI) trades below the 50 neutral zone while scoring 40.24, denoting slight market weakness during the intraday session. However, the CMF is at -0.08, suggesting the price in the oversold zone. Hence, the price might face a relief rally soon.

Conclusion

The market structure of Alibaba Group Holding Ltd (NYSE: BABA) stock has recently experienced a downtrend. Furthermore, the price struggling to sustain the $100 level. Alibaba faces competitive threats in its e-commerce and cloud businesses. Investors and traders should look for selling opportunities as the technical and analyst ratings suggest the same.

Technical Levels 

Major resistance: $105.05 and $212.30 

Major support: $79.48 and $77.77

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.