Alibaba (NYSE:BABA) is one of those companies that drives me crazy. Full of potential, BABA stock never seems to be able to maintain an upward trajectory. 

It’s a two-step forward, one-step back kind of stock if there ever was one.

In January 2018, I wrote an article about how BABA stock will get to $400.

Here’s a brief glimpse into my thinking:

“BABA stock first hit $100 in October 2014, before losing half its value over the next nine months. Alibaba stock didn’t get back to $100 until September 2016. Set to hit $200, BABA’s snagged a two-bagger for shareholders in just 17 months. Assuming it repeats the feat in the same amount of time, BABA stock would hit $400 in June 2019…If successful, we’re talking about a four-bagger in less than three years. The S&P 500, by comparison, would take around 10 years based on a 16% annualized total return over the past five years.”

Alibaba stock closed trading on Jan. 24, 2018, at $195.53, a few dollars short of $200. I was predicting (always a losing proposition) that it would hit $400 in 17 months. The closest it’s come in the 15 months since then is $211.70, the 52-week and all-time high it reached last June.

My price target was utterly over-the-top.

Thankfully, my editor’s given me a chance to atone for my overzealousness by setting a new target of $250, only 35% away from current prices.

How Does it Get There?

I don’t think much has changed from my assumptions in early 2018. It still needs to build these three areas of its business to have a shot: International expansion, cloud growth both domestically and outside China, and its other investments.

Alibaba doesn’t report its Q4 2019 results until May 15, so, for now, I’ll use its third-quarter results for each of these areas.

International Expansion: Most of the company’s international revenues come from ecommerce sales in Southeast Asia are generated by Lazada, Alibaba’s majority-owned shopping site serving Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

In the three months ended Dec. 31, Alibaba’s international ecommerce sales (retail and wholesale) were $1.2 billion or 7.8% of the company’s total commerce revenues. In the third quarter, its international retail commerce sales grew by 23% year over year while its international wholesale commerce sales rose by 31%, albeit representing a smaller dollar value than retail.

As InvestorPlace contributor Tezcan Gecgil recently commented, Alibaba also is doing a lot in Europe to grow its international business although it’s still very early in the game.

If it continues to deliver double-digit growth in this area, Alibaba’s valuation will inevitably rise.

The Cloud: Alibaba continues to grow its cloud business. In the first nine months of fiscal 2019, Alibaba generated $2.5 billion in cloud revenue, 79% higher than in the same period a year earlier. In Q3 2019, it grew the cloud by 84% to just less than $1 billion.

Alibaba’s cloud business continues to become a more important revenue generator for the company. Unfortunately, it hasn’t reached a scale necessary for profitability. In the first nine months of fiscal 2019, its operating loss was $650 million, more than double in the same period a year earlier.

So, in the first nine months of 2019, its cloud business lost 26 cents for every dollar of revenue compared to 22 cents a year earlier.

As I stated in January 2018, if Alibaba can deliver a positive operating margin while closing the gap on Amazon’s (NASDAQ:AMZN) AWS revenue (easier said than done), it’s going to have a much easier time getting to $250 and beyond.

Other Investments: I’m not going to spend a lot of time on the company’s digital media, entertainment, and innovation initiatives. Suffice to say; it can’t keep losing billions of dollars on these businesses and still expect investors to pile into BABA stock.

Sure, you could say BABA is merely following a trail that Amazon blazed, where scalability is more important at this stage of the game, but as you recall, investors grew wary of Amazon’s money-losing ways. Fortunately, for owners of AMZN stock, its cloud business came to the rescue.

In Alibaba’s situation, the roles are reversed. Ecommerce is paying its cloud businesses’ freight. That situation can only carry on for so long.

The Bottom Line on BABA Stock

In November, I recommended Alibaba along with six other Chinese stocks that were down but not out. Since then, it’s up about 28% and on a bit of a roll.

In my opinion, Alibaba is doing everything it can to move the needle.

Is $250 possible in 2019?

I think so.

However, I’m the same guy who predicted it would hit $400 by this June. Do your due diligence before buying.    

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.