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Trade Worries Shouldn't Derail Alibaba

We think the Chinese retail giant is one of the most undervalued consumer-focused stocks.


Wide-moat Alibaba has had a summer to forget, with shares falling 22% to $164 per ADR after reaching an all-time high of $211 in mid-June.

The timing of the sell-off coincides with tariff announcements on Chinese goods by the United States and subsequent retaliatory tariffs on U.S. goods by China. However, we believe that negative trade war headlines have been masking many of the positive steps that the company has taken to increase engagement among its existing user base and incubate new potential avenues of revenue. We remain comfortable with our $240 fair value estimate, and believe Alibaba is one of the more undervalued investment stories in the consumer category.

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R.J. Hottovy does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.