Weaknesses of BABA stock and China tech sector in general post their strong earnings recovery for March quarter suggest market’s concerns centering around growth outlook.
BABA fundamental has tracked well to our projection since last November. P/E multiple contraction - which priced in too much pessimism - prevented our bullish call from materializing, for now.
We stick to our thesis that March quarter results set stage for BABA re-rating on sustained recovery, well-executed overhaul effectively unlocking value and investors’ renewed appetite for China assets.
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