Alibaba share price hits new high: Where next in 2020?

Alibaba Group saw share price soar to new heights on Christmas eve. How should investors approach the rising stock next year?

Chinese e-commerce site Alibaba Group Holding Limited (NYSE: BABA) has extended its lead as Asia’s most valuable company, after it hit a new share price peak of US$215.43 on Tuesday, December 24.

This takes the company’s market capitalisation to US$574.80 billion, further distancing itself from its nearest rival – fellow Chinese technology company Tencent, which has a market cap of US$422 billion.

Its secondary listing in Hong Kong (HKG: 9988), which kicked off last month, also saw share price rise to a new high of US$211 per share that same day.

Alibaba’s American Depository Share (ADS) price has risen over 33% since October, when it first announced a launch date for its public offering in Hong Kong.

Why not learn how to trade company shares like Alibaba's with an IG demo account now? It's free.

More room to grow

Analysts say that while the company’s stock performance in the last one month has been nothing short of impressive, there is still a lot more room for share price to grow.

According to Alice Yap, Managing Director & Head of Pan-Asia Internet Research, Citigroup Global Markets Asia, Alibaba’s ADS could hit US$284 per share over the next 12 months.

She wrote in a recent media note that the group will likely increase its total revenue by 36.5% in the fiscal year 2020 to hit 514.5 billion yuan (US$73.1 billion). She also predicted that earnings before interest, taxes, depreciation, and amortisation will rise by 32% to 161.4 billion yuan.

Making mention of the company’s ‘Digital Economy’ strategy, she noted: ‘Three years later, as we head into 2020, Ali has extended its commerce addressable market to New Retail, and is working with industry partners to transform and digitise their operations via the Alibaba Business Operating System’.

The stage certainly seems set for Alibaba’s continued expansion in 2020, with CEO Daniel Zhang re-emphasising this point during the Hong Kong IPO launch. He stated that the group ‘wants to use digital technology to help customers and partners embrace the era of the digital economy’.

It also hopes to create 100 million jobs eventually, serve over one billion annual active consumers, and achieve over 10 trillion Chinese yuan in annual gross merchandise volume through its China consumer business.

Still some risks involved

While it seems like the bull case remains strong for Alibaba, there are several geopolitical and economic factors that investors should pay close attention to in the coming months for good measure.

The upcoming US-China phase one trade deal signing ceremony slated for the first week of January, as well as China’s GDP growth slowdown, are two factors that could potentially affect Alibaba’s share price movement.

Furthermore, as Investor’s Place Thomas Niel wrote, Alibaba US stocks are currently trading at a slight premium, with lots of ‘priced-in expectations’.

‘If the company falls short of its impressive growth projections, shares could take a big tumble,’ he wrote, adding that his recommendation is for investors to ‘wait for a reasonable valuation’ before making a move.

Did you know that you can now practise trading company stocks like Alibaba's with an IG demo account now for free?

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.