Alibaba (NYSE: BABA) stock price has been struggling to sustain upside momentum over the last twelve months. Investors concerns over U.S. China trade war restricted its share price in the range of $129.77 – $195.72. The shares are currently trading around $172.
Market pundits expect its share to hit $200 mark again this year. Alibaba stock previously traded above $200 level in mid-2018.
Jefferies analyst Thomas Chong believes Alibaba stock has the potential to trade above $210.
The firm’s confidence in its price performance is due to the better-than-expected total revenue growth and cloud-computing revenue. Baba’s cloud-computing revenue rose 66% Y/Y in the second quarter, driven by increasing average revenue per paying user and the number of paying customers.
The company’s revenue jumped 42% year over year in the second quarter. Its China retail marketplaces annual active consumers increased by 20 million to 674 million. Mobile MAUs on its China retail marketplaces hit 755 million, up 34 million over the same period last year.
“We had a strong quarter to start our fiscal year, with revenue growing 42% and adjusted EBITDA growing 34% year-over-year,” said Maggie Wu, Chief Financial Officer of Alibaba Group. “We are pleased to see sustained user engagement and consumer spending across our platforms. We continue to invest for long-term growth while at the same time gaining cost efficiencies in our investment areas.”
Diluted earnings per share stood at $1.17 in Q2, an increase of 56% year-over-year. Higher revenue and earnings are adding to its cash generation potential.
The company has generated operating cash flow of $5,042 million while free cash flows were standing close to $3,840 million.
Alibaba does not offer dividends to investors. Therefore, they are free to use these cash flows for investment in growth opportunities. The company plans to buy back $6 billion of outstanding shares in the following two years. Overall, the high double-digit growth in financial numbers is likely to add to share price momentum.
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