The coronavirus story has become frightening. You can’t even turn on the news anymore without seeing reports about the unstoppable virus that’s affected more than 100,000 people around the world. Numbers are only mounting. Governments around the world are racing to protect the public. At the same time, it’s crushing just about every stock on the market, some unfairly, like Alibaba (NYSE:BABA).
However, just as we noted about JD.com (NASDAQ:JD), BABA provides shelter from the storm.
In fact, that’s how Bernstein analyst Robin Zhu described companies like JD and BABA. All “as people stuck at home flock to play games and shop — cementing online habits,” reported Barron’s contributor Reshma Kapadia. As investors realize that, I strongly believe Alibaba stock can return to $230, near-term.
Alibaba is More Than an E-Commerce Giant
“Alibaba is a complex entity. It is often described as an e-commerce giant — but it is far more than that,” said Veljko Fotak, PhD, associate professor in the Department of Finance, School of Management at University at Buffalo. “While factory shutdowns all over China cannot be good news for a company that is, at its core, a business-to-business marketplace for the mainland, some aspects of the business are set to prosper.”
In addition, “There is something surreal about how resilient this stock has been, in the face of such shock to domestic industrial activity. A couple of weeks ago, the company revealed that its logistic arm was operating at 20% capacity, with couriers unable to return to work and local mobility restrictions hampering deliveries. This week, we have seen news that Alibaba’s research labs have developed an artificial intelligence system that can diagnose the COVID-19 virus based on images from CT scans.”
At the same time, Alibaba is the Amazon (NASDAQ:AMZN) of China. Not only is it best known for e-commerce, it’s also involved in the explosive cloud computing business. As I noted in November, with the global cloud market expected to grow 17.5% this year to $214.3 billion from $182.4 billion in 2018, according to Gartner, BABA stock could be a major beneficiary.
Analysts are Still Bullish on Alibaba
While Alibaba CEO Daniel Zhang did say the virus is a “black swan” event that would negatively affect the company’s suppliers and employees, analysts aren’t too concerned. The “underlying fundamentals [are] still solid” for China’s largest e-commerce company, Susquehanna Investment Group’s Shyam Patil said. He still thinks Alibaba is “the China e-commerce category killer with a large secular growth opportunity ahead.”
Plus, company delivery operations are already returning to normal, says Motley Fool contributor Donna Fuscaldo, who highlighted that “Cainiao, the global logistics company majority-owned by Alibaba, has returned to pre-coronavirus levels.”
Bottom Line on Alibaba Stock
The coronavirus has been devastating for global markets and stocks. Unfortunately, Alibaba stock, like other quality equities, are being thrown out with the bathwater. However, BABA stock remains one of the best “shelter from the storm” names to own throughout and after the crisis.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
