Alibaba Holdings Limited (BABA) was still sliding pre-market on Friday even as its biggest shopping day of the year approaches.
"Singles Day," a holiday created by Alibaba in 2009, takes place on 11/11 each year and has grown into a $25.4 billion online shopping extravaganza. For reference, that represents over 10 times the online shopping spend of Americans on Black Friday last year.
This year, the event will branch out beyond China, as well, as Alibaba's Filipino subsidiary -- and the largest e-commerce operator in southeast Asia -- is delivering deals to drive even more traffic on the day. Given the expansion and further saturation of Alibaba's Taobao and Tmall e-commerce on the tenth anniversary of the holiday, it could mark record sales figures.
China is gearing up for the biggest shopping event of the year on Sunday "Singles' Day ".$BABA saw $25B worth of goods sold on its platforms alone in the 24-hour period last year. #trmx
— Juan Carlos Minero (@JuanCMinero) November 9, 2018
Still, shares are sinking as macro pressures and management moves cloud the company's big day.
"Other factors impacting the stock are much more important than results from a sales day in the short term," Hans Engel, market strategist for the Vienna-based Erste Group, told Real Money.
He noted that trade pressures, which have helped drag Chinese stocks down in 2018, should only add to problems at Alibaba, as Jack Ma makes his exit as chairman in 2019.
President Trump's administration has noted that it could raise tariffs to 25% on Chinese goods, which would further ruffle relations between the world's two largest economies and likely act to the detriment of major Chinese companies like Alibaba. The Shanghai index is already down over 20% year to date, even without the highest level of tariffs yet enacted.
"The situation is such that conflicts between the United States and China are still building. Also, Jack Ma has announced his resignation, which adds to uncertainty," Engel explained. "This combination is much more important than short-term sales factors."
Engel issued a "Hold" rating for the stock, given the amount of uncertainty going forward.
Many analysts on Wall Street are likewise cautious, with the overwhelming majority reducing price targets on the e-commerce giant.
That said, bullish sentiment on the stock remains, with almost every analyst surveyed by FactSet issuing a "Buy" rating for the company, despite reeling in price targets after a disappointing earnings release and guidance earlier this month.
"We view the guidance cut as the last shoe to drop, and would be looking to buy the stock, especially on a mid-term basis," Deutsche Bank analyst Han Joon Kim said. "We believe investors increasingly finding confidence that guidance cuts stem from company-specific issues, rather than macro, could lead to stock recovery."
Kim issued a $195 price target for the stock and a "Buy" rating on his belief that macro factors could be alleviated in the nearer term.
For now, the macro pressures and uncertainty seem to be outweighing the buying opportunity presented by Kim, making Alibaba not attractive enough for investors to go steady with it at the moment.
