by winston » Mon Jul 08, 2019 1:57 pm
not vested
Alibaba (BABA)
It’s all change over at Chinese e-commerce king Alibaba. The company recently announced that CFO Maggie Wu will replace Executive Vice Chair Joe Tsai as head of strategic acquisitions and investments. That’s as the company reorganizes several business divisions including DingTalk and Freshippo.
Separately, in a recent 6-K filing, Alibaba proposed a one-for-eight stock split, to increase “flexibility in the company’s capital raising activities, including the issuance of new shares.”
Following the news, top-rated Stifel Nicolaus analyst Scott Devitt reiterated his bullish outlook on the stock. “We recently added shares of BABA to the Stifel Select List and continue to recommend the idea for investors with long-term investment horizons” said the analyst.
He approves of the recent developments at BABA. For, example, the analyst writes of Maggie Wu’s new appointment: “Wu has been CFO since 2013 and first joined Alibaba in 2007; we view her increased responsibilities at the top of the organization as a natural progression in the company’s leadership.”
More importantly, he views the stock split proposal as a step towards a reported Hong Kong listing. Indeed, Alibaba recently filed confidential paperwork for a listing on the Hong Kong stock exchange with plans to raise as much as $20B, according to multiple news reports.
“New capital could be deployed for buybacks or to extend the company’s competitive lead” contends Devitt.
Investors in mainland China, who can buy and sell Hong Kong-listed stocks through a cross-boundary trade link, could also stimulate demand for shares” the analyst added.
In total the company has received 15 back-to-back buy ratings from the Street over the last three months. They are predicting (on average) 28% upside potential from current levels.
Source: Tip Ranks
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