Shares of formerly beleaguered eCommerce giant Alibaba Group Holding may be forming a bottom with some real support, according to Bloomberg. If that is true, then the stock could see continued momentum after logging a huge decline after going public not long ago.
As the newswire noted Monday (Oct. 26), Alibaba shares have been coming toward the close of their best month, and that is on the heels of sell-side expectations being increased by analysts ahead of the Tuesday earnings report, which had been expected to log top line growth of 27 percent through the third quarter. And the tailwinds are favorable as the Chinese government is looking to spur growth through the next five-year plan.
[bctt tweet=”Alibaba shares have been coming toward the close of their best month.”]
As the Chinese economy goes, so too does Alibaba. The company’s stock soared post-IPO then fell to Earth, wiping out $150 billion in market value, which Bloomberg noted was the capitalization equivalent of IBM.
So, what has taken the shares up since bottoming at 16 percent below its IPO price, only to bounce up higher by as much as 33 percent from that nadir? For one thing, Jack Ma, who helms the company, has stated that investors are too fixated on China, and the implication has been that the worst of the storm clouds have passed for the company, which has been busy expanding into both entertainment and local businesses. In one notable acquisition, the firm bought the rest of Youku Tudou, a streaming media site, and also pushed further into Europe across Germany, France and the United Kingdom. Those initiatives, according to some bullish analysts, show that the company has been able to monetize new initiatives and advertising, even as the economy benefits from government initiatives and better momentum that is expected post the currency devaluation over the summer of 2015.
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