Bullish on Alibaba Stock Due to China’s Economic Recovery

Investors have good reasons to be bullish about the stock of Chinese tech giant Alibaba Group Holding. Last week, the company announced a plan to unlock value for shareholders that spurred a wave of bullish bets on its shares. Now, with signs that China is beginning its economic recovery from the Covid-19 pandemic, the company should benefit from the renewal of the country’s economy.

Alibaba’s core business remains in Chinese e-commerce, which suffered last year from the severe lockdowns due to the pandemic. However, customer management revenue–a key segment that represents selling services, like marketing, to merchants on its platform–has seen a healthy recovery as the country begins to open back up. Apparel, sports, and outdoors goods have bounced back due to shifting consumer habits, while online grocery sales have seen near-term headwinds as the lockdowns lift.

The company’s plan to split itself up, however, is not the only reason to be optimistic about the stock. Analysts at Benchmark Research have raised their projections for the second half of the March quarter, citing their positive findings that certain discretionary categories have managed to recover. Benchmark also reiterated a Buy rating and $180 price target on Alibaba, which saw its stock open just shy of $99 on Tuesday.

Alibaba is likely to continue its upward trend with key quarterly e-commerce sales, and the anticipated restructuring will only boost investor sentiment with the possibility of “hidden value” inside these distinct business units unlocking for the public. Despite the pandemic, investors remain optimistic about the future of the company and the overall Chinese economy.