Alibaba’s shares received a boost last week when founder Jack Ma expressed satisfaction with the company’s turnaround. Co-founder and current Chair Joe Tsai also shared confidence in Alibaba’s ability to remain a top e-commerce player. However, Wall Street analysts have expressed concerns about the company’s spending on future growth, leading several to lower their price targets on the stock. JPMorgan, for example, cut their price target to $100 a share, down from $105, citing Alibaba’s increasing investments in core operations like domestic and international ecommerce and cloud services.
Alibaba has undergone significant changes in the past 12 months, including restructuring into six units aimed at unlocking shareholder value. The company has also cancelled plans for IPOs of its cloud business and logistics arm, Cainiao. Tsai acknowledged past mistakes and focused on improving the company’s shopping app user experience and reorganizing personnel to align with the new strategy. Alibaba has also seen changes in leadership, with Eddie Wu taking over as CEO and Trudy Dai and Daniel Zhang stepping down from their positions.
Analysts expect Alibaba’s financial metrics to remain weak in the near term due to sustained investments in platforms like Taobao and Tmall. Competition in the e-commerce sector remains fierce, with apps like Pinduoduo and Douyin challenging Alibaba’s dominance. In the AI space, ByteDance’s Doubao chatbot has surpassed Alibaba’s Tongyi Qianwen in popularity and daily time spent by users. Alibaba is integrating AI tools and models into its e-commerce and cloud businesses, but Tsai noted that China lags behind the U.S. in AI development.
Despite optimism about Alibaba’s future growth potential, some analysts maintain a conservative view due to the expected slow pace of the company’s business transformation. Morgan Stanley, for example, has a price target of $85 and rates the stock as equal weight. Overall, companies like UBS and JPMorgan remain positive about Alibaba’s long-term prospects but acknowledge challenges in the near term related to heavy investments and increased competition. Amid these changes and challenges, Alibaba continues to navigate its path forward as a leading e-commerce and technology company in China.
