Although Alibaba Shares Have Been Downgraded, They Have Rallied

(CTN News) – Despite Alliance Bernstein, the wealth management firm, had downgraded Alibaba’s rating three days earlier and lowered its rating on the Chinese e-commerce giant, Alibaba shares rose 2% on Tuesday.

Earlier this week, Bernstein’s cut Alibaba’s price per share from $130 to $98 from $130 on Monday. At the time of writing, however, it was trading at around 87 dollars at midday Tuesday.

In a note provided to The Messenger by one of the analysts from the investment firm, Rob Zhu, he stated that Bernstein was lowering its rating for the company from outperform to market perform due to the fact that earnings growth and shareholder returns have been lower than expected.

Alibaba stock has remained “very cheap” for a while now, but it is feared that competition with rival platforms, like the Chinese e-commerce platform PDD, will push it further down and create a “value trap” risk for the company’s stock.

In a dramatic move, the company’s shares skyrocketed last week after it announced a major reorganization of its management, which will go into effect this fall.

Multiple tech companies experienced a drop in their value earlier this month as Goldman Sachs joined an increasing number of Wall Street banks in lowering their growth outlooks for China in an effort to boost profits.

According to Bernstein, the reason for its downgrade of Alibaba is less due to the company’s recent restructuring into six divisions than to the recent changes that have been made to the company’s earnings.

Zhu said that he and others have interpreted Alibaba’s recent management changes to mean the changes have been long overdue, and that the new set-up is essentially the founders coming back together to put the company on the right track,” he said.

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