- Citi analyst Alicia Yap lowered the price target on Alibaba Group Holding Ltd (NYSE:BABA) to $177 from $200 (59.5% upside) and kept a Buy rating on the shares.
- Amid the widening spread of COVID cases and city lockdowns, the analyst thinks overall economic activities in China have been negatively affected, which has drained Alibaba's profit growth.
- Yap notes the COVID impact will drag into Q1 and possibly delay the recovery trend.
- Alibaba has also likely slowed investment subsidies, given cost optimization efforts across internet peers.
- A growing COVID-19 concern in China, with over 13,000 daily cases reported in Shanghai, led the U.S. companies in China to reduce 2022 projections.
- Chinese stocks also sold off following a strength from a potential rule change that would allow Chinese companies to share sensitive data with U.S. regulators.
- The financial hub and China's biggest city Shanghai experienced a stricter lockdown with the rapidly rising COVID-19 cases fuelling concerns over how the lockdowns could further impact the economy.
- Price Action: BABA shares traded lower by 2.54% at $108.18 in the premarket on the last check Wednesday.
