Alibaba Group Holding (NYSE:BABA): Reassessing Valuation After a Strong 1-Year Share Price Rebound
Alibaba Group Holding (NYSE:BABA) has quietly outperformed over the past year, with the stock climbing roughly 85% even as its past 3 months have been choppy and sentiment remains divided.
See our latest analysis for Alibaba Group Holding.
That backdrop makes the recent 1 day share price return of 6.25% and a 1 year total shareholder return of 85.11% look more like momentum rebuilding than a one off pop, even after a softer 3 month share price stretch.
If Alibaba has put you back in a growth mindset, it could be a good moment to see what else is gaining steam, starting with fast growing stocks with high insider ownership.
With earnings still growing double digits and the share price trading at a steep discount to analyst targets and intrinsic estimates, is Alibaba still a mispriced recovery story, or is the market already baking in its next growth phase?
Most Popular Narrative: 21.4% Undervalued
With Alibaba last closing at $155.74 against a narrative fair value near $198, the valuation case leans on earnings power compounding over time.
Elevated near-term investments in new business areas (AI/cloud and quick commerce) are currently weighing on EBITDA, but realized scale, operational efficiencies, and long-term secular demand for digital services and rising consumer spending are likely to allow for significant earnings and margin improvement as these initiatives mature.
Want to see how steady revenue growth, evolving margins, and a higher future earnings multiple all fit together into that price? The full narrative unpacks the math.
Result: Fair Value of $198.04 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, sustained heavy AI and quick commerce spending, amid intense competition and regulatory uncertainty, could delay margin recovery and undermine the long term earnings story.
Find out about the key risks to this Alibaba Group Holding narrative.
Build Your Own Alibaba Group Holding Narrative
If you see the story differently, or want to dig into the numbers yourself, you can shape your own view in minutes by starting with Do it your way.
A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Alibaba Group Holding.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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