Alibaba Stock Hits Six-Month Peak, More Than 70% Down From ATHs

Alibaba Group Holding Limited's (NYSE: BABA) shares witnessed a notable rise, closing up 7.05% on Thursday, and continuing to add in the premarket (+1.8%) to make a six-month high for the e-commerce giant.

This surge came in the wake of impressive results reported by one of its major competitors in the Chinese e-commerce space, JD.com (HKG: 9618), whose earnings surpassed expectations, as well as the announcement of a dividend to come from BABA. Chinese stocks have had a difficult 12 months, and news of positive beats from the sector from big names does have the potential to shift contemporaries.

JD.com, another prominent player in the industry, reported an annual revenue increase of 7% to $36 billion in the first quarter, accompanied by a substantial 18.7% rise in earnings. This news seemed to have had a positive spillover effect on Alibaba, as investors potentially see JD.com's performance as an indicator of the sector's health.

Investing in stocks generally is not without risks, but in more recent times, the risk surrounding Chinese stocks seems to have heightened in the eyes of markets. Even a company as well entrenched such as Alibaba have had a difficult few years, with BABA shares down more than 70% from the highs above $300 set in late 2020, and struggling to shift sentiment. Such investments come with challenges linked to political stability, transparency, currency fluctuations, and geopolitical events. These factors can significantly impact the stock's performance and investor sentiment.

Amidst these conditions, Alibaba's stock was trading at the highest level since November 2023. It is currently nearing a crucial resistance band between $87.80 and $88.80. This price range is vital for investors, as breaking through resistance can confirm a continued uptrend, or failure to do so can lead to a reversal.

Technical analysts also pay close attention to moving averages as indicators of momentum and trend. For Alibaba, the 200-day Simple Moving Average (SMA) stands as a key support level that could influence the stock’s trajectory. The 50-day SMA is showing bullish signs, which could encourage more traders to jump on board.