The lone bear on Alibaba sees ‘no point catching a falling knife’ as tech investors not rewarded for embracing China risk
- Members of the Hang Seng Tech and Nasdaq Golden Dragon China indices lost US$163 billion in market value last week
- Analysts at Citigroup, Morgan Stanley, CLSA, Mizuho and others have lowered their price targets again after earnings miss, weaker guidance
Manuel Muhl at Frankfurt-based DZ Bank trimmed his price target for the American depositary shares last week to US$130 from US$135 on November 18, after the e-commerce group last week reported an 87 per cent slump in profit in its second-quarterly results. He had lowered the target to US$135 on October 10.
The current 12-month price-target for Alibaba stands at US$215.24, according to analysts tracked by Bloomberg. The consensus has been slashed by 21 per cent since late August. DZ Bank has the most bearish target while Macquarie is at the opposite end with a target of US$339.
“We are currently witnessing a ‘price discovery’ process and so far we have still not found the adequate risk-premium for the sector,” Muhl said in an interview late on Friday. “And again, why would you embrace China risk right now, when it’s not even rewarded?”