Short seller makes a startling contrarian call: go long on Alibaba shares till it hits US$250

High profile short-seller and founder of Citron Research Andrew Left is bullish on Alibaba Group Holding, on what he says is “the world’s most shorted stock”, ahead of the e-commerce giant reporting earnings later this evening.

The New York-listed firm is expected to post a net profit of 14 billion yuan (US$2.2 billion) in the fourth quarter, compared to 20 billion yuan in the previous quarter, the smallest in 1.5 years, according to a Bloomberg survey of analysts.

Revenue is expected to climb 53 per cent to 59 billion yuan, but that would be the slowest in eight months, weighed by its investments in logistics, cloud computing, online video and physical retail.

The interest to short Alibaba’s New York shares has been rising sharply. It currently stands at about 124 million shares compared to 20 million shares in September 2014, according to Bloomberg data. Alibaba is owner of the South China Morning Post.

Analysts such as Qiu Zhicheng at ICBC International were also cautious about the overall equities market given the ongoing US-China trade dispute. He said he was not optimistic of any breakthrough deal emerging any time soon.

However, Left said in a research report that Alibaba’s stock price was on its way to US$250 as it was trading at a 40 per cent discount to Amazon even though the former’s business model is more asset light and empowers small businesses.