Read What It Will Take For Alibaba's Most Accurate Analyst To Reverse His Sell Recommendation

Author: Anusuya Lahiri | June 08, 2022 07:15am

• DZ Bank AG's Manuel Muehl remained adamant on his sell recommendation on Chinese stocks, including Alibaba Group Holding Ltd (NYSE:BABA), amid hints toward possible ease in the regulatory crackdown.
• Last summer, Muehl was the first to recommend the sell rating on Alibaba and JD.com, Inc (NASDAQ:JD), signifying higher accuracy than his peers.
• Muehl called the optimism surrounding the possible end to DiDi Global Inc (NYSE:DIDI) regulatory woes "a bit premature and highly undifferentiated."
• Muehl did not find any reason to be bullish on the sector following slower revenue growth, margins, and free cash flow reflected in the latest quarterly results.
• Muehl's target price of $85 for Alibaba and $49.5 for JD.com implies a downside of ~20% from their last close. 
• China recently released its gaming license approval list, which missed big names like Tencent Holding Ltd (OTC: TCEHY) and NetEase, Inc (NASDAQ: NTES), akin to the previous list.
• A concrete deal with Washington to prevent the U.S. delisting of Chinese firms, a step-back from anti-monopoly rules, and a notable uptick in consumer confidence and spending can only reverse Muehl's bearish stance on the sector.
• Price Action: BABA shares closed higher by 11.2% at $110.07 on Tuesday.
• Photo via Wikimedia Commons

Posted In: BABA DIDI JD NTES TCEHY