BABA Stock: Buy, Sell, and the Never-Ending Wall Street Noise

Alright, let's talk about Alibaba. Up 82% over the last year? 89% year-to-date? Sounds fantastic, right? Like we're all gonna be swimming in yuan by next Tuesday. But hold on a damn minute. Before you go mortgaging your house to buy BABA stock, let's dig a little deeper, shall we?

Cloud Cover-Up?

So, Bank of America's Joyce Ju is still slapping a "Buy" rating on this thing, even after chopping the price target from $200 to $188. Why? Because the cloud business is supposedly booming. Cloud revenue up 34%, AI stuff growing triple digits for nine straight quarters... Okay, fine. But here's what gets me: they're conveniently glossing over the fact that adjusted diluted EPS missed expectations. Badly. Like, fell-off-a-cliff badly.

And cash flow? Down the drain. Where's all that cash going? Oh, right, "increased spending on AI, cloud, and quick commerce." Sounds like a classic case of throwing money at a problem until it (hopefully) goes away. It reminds me of when I tried to fix my leaky faucet with duct tape and a prayer. Didn't work then, not convinced it'll work for Alibaba now. Maybe I should call them and offer my expert "duct tape" consulting services...

Ju thinks cloud revenue will stay on a "fast growth track." But how fast is fast, really? And for how long? And at what cost? They're bragging about AI revenue, but what kind of AI are we talking about here? Is it actually useful, or just another buzzword to pump up the stock price? Are they just throwing money at the wall and seeing what sticks?

Quick Commerce, Slow Profits

Then there's the quick commerce side of things. Losses are "improving," down to a measly 36-37 billion yuan. Losses per order narrowed to 5 yuan. Oh, joy. Management says losses should drop by at least half. "Should." That's doing a lot of work there. It's like when my landlord says he should fix the hole in my roof next week. I'll believe it when I see it.

And let's be real, who actually needs "quick commerce" anyway? It's just another way to fuel our instant gratification addiction. I can't even remember the last time I went to a grocery store. I just hit a few buttons and some poor bastard on a scooter shows up with my organic kale chips and artisanal kombucha. It's convenient, sure, but is it sustainable? Both for the planet and for Alibaba's bottom line?

E-Commerce: The Real Elephant

Now, here's the kicker: softer expectations for the main e-commerce business. The thing that actually made Alibaba what it is today. Customer management revenue slowing down because "earlier pricing benefits fade." Translation: they were artificially inflating the numbers with discounts and promotions, and now that's not working anymore. Offcourse, that's what happens when you try to trick people.

Ju cut earnings forecasts by 7% to 20% through FY28. Oh, but don't worry, she "doesn't see this as a long-term issue." Give me a break. That's like saying a heart attack isn't a long-term issue as long as you survive it. User traffic and engagement are "improving," she says. But are they actually buying anything? Or are they just window shopping and then going to Temu for the real deals?

Analysts have a "Strong Buy" consensus on this thing, with an average price target of $197.43. That's a 25.27% upside from current levels, they claim. But analysts are wrong all the time. Remember when they were all saying WeWork was the future of office space? Yeah, me too. I'm not saying Alibaba is the next WeWork, but I'm also not not saying that. According to a recent article, Alibaba Stock (BABA) Is a ‘Buy,’ Affirms Bank of America Despite Price Target Cut, Bank of America still maintains a buy rating on the stock despite cutting the price target.

This Is a House of Cards

So, what's the real story here? Is Alibaba a growth engine poised to dominate the global e-commerce landscape? Or is it a carefully constructed illusion, propped up by unsustainable spending and wishful thinking? I'm leaning towards the latter. There are too many red flags, too many unanswered questions, and too much reliance on vague promises of future growth. And frankly, maybe I'm just too cynical for this kinda stuff. But I've been burned before, and I'm not about to let it happen again.