Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE:SPY) total return over the last 12 months is 46.6%. But there is no question some big-name stocks performed better than others along the way.
Alibaba’s Difficult Road: One company that has been a disappointing investment in the last year has been Chinese e-commerce and cloud services giant Alibaba Group Holding Ltd - ADR (NYSE:BABA).
Fortunately for Alibaba investors, the COVID-19 pandemic actually boosted demand for Alibaba’s e-commerce, cloud services and various other online businesses and services.
In fact, Alibaba’s revenue jumped 35.2% in 2020 to $509.7 billion, and its net income was up 70% to $149.4 billion. In the most recent quarter, Alibaba reported 50% cloud computing revenue growth, far surpassing U.S. counterpart Amazon.com, Inc. (NASDAQ:AMZN).
At the beginning of 2020, Alibaba shares were trading at around $217. By the beginning of March, the stock was down to $208.59 as China had already gotten slammed by the coronavirus pandemic.
Alibaba ultimately bottomed at $$169.95 during the pandemic-driven March sell-off in the U.S. market. Fortunately for Alibaba investors, the dip did not last long.
By mid-April, Alibaba shares were back above $200 and by July they were back at all-time highs above $230. Alibaba ultimately made it as high as $319.32 in late October.
Alibaba In 2021, Beyond: Unfortunately, while the rest of the market was making new highs in late 2020 and early 2021, Alibaba took a huge hit from Chinese and U.S. regulators.
First, Alibaba shares were slammed by a crackdown from the Chinese Communist Party after Alibaba co-founder Jack Ma criticized regulators for having a “pawn shop mentality” when it comes to banking. Chinese regulators subsequently suspended the IPO of Alibaba affiliate Ant Group and initiated an antitrust crackdown on all Chinese big tech companies. Alibaba was ultimately fined $2.8 billion in April for violating China’s antitrust regulations.
At the same time, Alibaba has faced regulatory uncertainty in the U.S. as well after the Senate passed a bill in March that could potentially delist Chinese stocks from trading in the U.S. within a matter of years if they fail to meet strict accounting standards and prove they are not controlled by a foreign government.
Despite all the uncertainty, Alibaba investors who bought one year ago and held on have generated a positive return on their investment. In fact, $1,000 in Alibaba stock bought on May 10, 2020, would be worth about $1,120 today.
Looking ahead, analysts are expecting much better returns from Alibaba in the next 12 months. The average price target among the 52 analysts covering the stock is $319.72, suggesting 44.7% upside from current levels.