Alibaba shares got a boost last week from news that founder Jack Ma expressed his happiness with the company's turnaround so far. This came after Joe Tsai, co-founder and current president, told CNBC in late February that he felt “more confident” about Alibaba's ability to remain a major player in e-commerce. Ma stepped down as chairman in 2019. Wall Street analysts expect the business to grow, but last week several trimmed their price targets for the stock. Their common concern is how much Alibaba has to spend in the near term for future growth. JPMorgan lowered its earnings forecast based on Alibaba's “increasing commitment to investments in core operations: domestic and international e-commerce and cloud,” Chinese internet analyst Alex Yao and team said in an April 9 report. They lowered their price target to $100 per share. , down from $105 previously, while maintaining its Overweight rating. The new target price is still about 33% higher than where Alibaba's US-listed shares closed on Thursday. The share price fell during a difficult period of about 12 months, as the company shuffled its management by restructuring into six units aimed at subsidiary operations – “to unleash shareholder value”. One by one, the company canceled IPO plans for its cloud business, and then its logistics arm Cainiao. “The first thing we did was admit mistakes,” Tsai told Norges Bank Investment Management CEO Nikolai Tangen in an interview, according to a video posted on April 3. The company says it owns 2% of Alibaba. “We have admitted in the past that we may not have focused on the user experience of our (shopping app),” Tsai said. “The second thing is to reorganize our staff, and change the organizational structure that suits the strategy.” Eddie Wu became CEO of Alibaba in September, and is also acting head of its cloud business. He succeeded Trudy Day as head of Taobao and Tmall's e-commerce businesses in December. Daniel Chang, the company's previous CEO, left abruptly rather than staying on to lead the cloud as originally planned. “In the near term, BABA's financial metrics should remain weak over the next few quarters, given continued user investment in Taobao Tmall and (Alibaba International Digital Commerce) investment,” UBS analyst Kenneth Fung and team said in an April 9 report. “There is likely to be a clearer upside in the second half if the overall recovery builds momentum and as financial results emerge more realistic from the new business strategy,” UBS said. They lowered their price target by $1 to $105 per share and maintained a buy rating. Competition remains fierce across Alibaba's key business lines. PDD Holdings' Pinduoduo and ByteDance's Douyin, the local version of TikTok, have emerged as Alibaba's main e-commerce competitors. The company has led the industry's rapid growth in China through its Taobao and Tmall platforms. In the relatively new world of artificial intelligence, ByteDance's chatbot Doubao is more popular than Alibaba's, according to Nomura, citing Questmobile data. Dubao had about 3.7 million users as of the end of March, more than double the number of users of Alibaba's Tongyi Qianwen AI chatbot, the data showed. Baidu's Ernie bot came in second place, with about 2.5 million daily active users. With average daily time spent, Dubao remains in first place with 8.4 minutes, but Alibaba's Tongqianwen is in second place with 7.7 minutes as of the end of March, according to the data. Alibaba is also integrating AI tools and models with its e-commerce and cloud businesses. However, in Tsai's interview with Norges Bank Investment Management, the Alibaba CEO said he estimates China is about two years behind the United States in terms of AI development. AI monetization was also given little mention in six analysis reports published last week on Alibaba's website. “We maintain our conservative view on BABA as the turnaround of the business is likely to take some time,” Gary Yu, an equity analyst at Morgan Stanley, and his team said in an April 10 note. They have a price target of $85 and, in contrast to many Buy ratings, rate the stock at equal weight. — CNBC's Michael Bloom and Arjun Kharpal contributed to this report.
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Jack Ma praises Alibaba. Wall Street is more cautious
