Categories Analysis, Retail

Will Alibaba (BABA) stock gain momentum in 2020 after record high?

Alibaba Group Holding Limited (NYSE: BABA) stock has risen over 68% and over 29% in the past three months. The shares have soared to a record high of $219.98 on Thursday. The stock is likely to gain momentum on strong demand, digital commerce, globalization, big data, intelligent logistics, and cloud computing.

The shares have remained the favorite of market watchers as the majority of the analysts recommended a “buy” rating. The stock has been trading above the 50-day and 200-day moving average of $200.95 and $179.11, respectively. This denotes the shares would rise in the near term ahead of the company’s earnings results.

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Image for representation. Courtesy: Bruno Kelzer on Unsplash

The company’s stock performed well amidst a weaker Chinese economy, protests and violence in Hong Kong, and the US-China trade war. Meanwhile, the market analysts expect a blockbuster year ahead for the stock to outperform as the phase one trade deal is due to be signed this month.

Alibaba has been struggling in the cloud business segment when compared with the major rivals Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT), who were dominating the sector. However, the company has shown double-digit growth in the cloud business in 2018. The segment is likely to contribute more in 2020 due to the improvement in the digital space.

During December-end, Amazon Web Services executive chief Andrew Jassy told Nikkei that Alibaba is catching up in the cloud computing sector but restricted mainly to China. Alibaba has a massive market potential for expansion in the international market specifically in the US and Europe. The company could turn beneficial by cloud computing expansion in the US in 2020.

Read: Baozun stock retreats on near-term concerns

In 2020, the company’s growth will be backed by key drivers including low-income consumers and new retail. In the international market, the company will continue to face the challenges of attracting customers and facing competition from other retail players.

Also Read:  Changes in the digital payments sector could bode well for Square (SQ) going forward

For the second quarter, Alibaba reported a 40% jump in revenues driven by the strength in the China commerce retail business and Alibaba Cloud. The bottom-line growth was benefited by higher top-line and lower costs and expenses. Cloud computing revenue grew 64% driven mainly by an increase in average revenue per customer.

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