Investing

BABA Stock Could Drop 6% After Feb. 12, According to This Wall Street Expert

Chris MacDonald

Published: February 6, 2025 11:01 am

Alibaba (NYSE:BABA) is among the most notable and important e-commerce stocks globally. The China-based company dominates many markets in Southeast Asia, with its core commerce segment providing both retail and wholesale operations, while the company’s local consumer services division covers delivery platforms like Ele.me and navigation services like Amap. Cainiao handles logistics, and the Cloud segment includes Alibaba Cloud and DingTalk. 

In a way, Alibaba is a company I’d probably most equate to an Amazon in the U.S. market. This is a company that’s a cloud computing giant with a massive e-commerce footprint. As such, Alibaba’s fortunes are closely intertwined with overall growth in the Asia Pacific region, and make this company a great option for investors looking for exposure to secular growth trends in this region of the world.

The company is set to report its upcoming earnings on February 12, with analysts expecting significant volatility with BABA stock, considering the company’s historical pattern of performance in and around earnings. There’s a 67% probability of declining and an average swing of ±5.8%, so let’s dive into whether Alibaba has 6% upside or downside from here.

Key Points About This Article:

• Alibaba is set to report earnings on February 12, with a divergent set of expectations around where this stock could be headed after its print.
• Let’s dive into the company’s upside catalysts and downside risks and see if this is a stock that’s worth buying right now.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Here’s What Wall Street Expects

Wall Street analysts are expecting a relatively strong quarter from Alibaba, with the Chinese cloud and e-commerce giant expected to report revenue of $39.15 billion which will translate into $2.75 of earnings per share. Indeed, many are touting this report as a key test for investor confidence. Market sentiment leans slightly bearish, reflecting broader concerns about China’s economic landscape. 

I think such positioning and sentiment certainly makes sense, given the existing rhetoric around a potential tariff war between Trump and Xi. The Chinese economy is also one that hasn’t been firing on all cylinders of late, so there are certainly reasons why many in the market are taking a somber tone heading into this print.

That said, it’s also true that the consensus analyst price target for BABA stock currently stands at $124.40, implying 35.5% upside over the next year or so. And some analysts are ramping up bullish targets on the company, with Jefferies analysts set a more ambitious $142 target. Analysts at Jefferies have cited Alibaba’s expanding cloud and international commerce sectors as key growth drivers that could propel the stock higher on outperformance.

Beyond its financials, Alibaba’s earnings will serve as a broader economic indicator, offering insights into China’s consumer behavior and business climate. The company has faced slower domestic growth, but analysts are keen to assess whether its e-commerce and cloud divisions can sustain momentum. Strong results in these areas could restore investor confidence, while weaker-than-expected performance may lead to increased volatility.

So, Will Alibaba Trade Higher or Lower in 2025?

There are certainly reasons to believe Alibaba is poised for potential growth in 2025, given the number of growth catalysts underpinning the company’s overall business. Alibaba’s strategic investments in artificial intelligence (AI) remain a major focus, with the launch of Qwen2.5-VL (an advanced AI model) expected to expand Alibaba’s capabilities across multiple industries. These innovations could improve operational efficiency and drive adoption of AI-powered services.

That’s to say nothing of China’s underlying growth trends, with its middle class still growing and overall demand for goods and services (consumption) continuing to rise.

The thing is, Alibaba’s focus on core markets in Asia has been its downfall of late. There are risks to investing in China, simply put. And for U.S.-listed Chinese stocks, these risks remain very high right now.

Accordingly, this is a stock I think investors who aren’t comfortable with volatility may want to steer clear of right now. I do take the consensus view that risks are likely tilted to the downside, at least for now. Accordingly, this is a stock that may be worth considering post-earnings, when investors have a bit more clarity into where Alibaba is headed from here.