Alibaba (NYSE: BABA), the Chinese e-commerce giant, faced severe challenges in 2023. The expected revival of the Chinese economy failed to materialize and the company continued to lose market share to PDD Holdings. Additionally, its plan to spin off non-core businesses encountered setbacks due to new U.S. chip export restrictions, resulting in a 12% decline in stock value for the year, as reported by S&P Global Market Intelligence.
Despite early gains, Alibaba faced a steady decline throughout the year, as illustrated in the chart below.
The Continuous Struggle of Alibaba
While Alibaba’s stock initially surged in 2023, investors’ hopes for a Chinese stock market revival were dashed, and Goldman Sachs’ promising note did little to reverse the downward trend. The stock plummeted in anticipation of an underwhelming earnings report in February and continued to slide as the company reported mere 2% revenue growth for the December quarter. However, earnings per share increased by 14% to $2.79, demonstrating the company’s efforts to reduce costs and drive efficiencies.
In a glimmer of hope, the stock rebounded at the end of March with the announcement of a plan to break up the company into six businesses, yet these gains were short-lived. The stock remained volatile through the second quarter, and export control concerns on U.S. chips weighed heavily on investor sentiment during the third quarter. In a significant blow, the stock plunged in November as the planned spinoff of its cloud computing business was abandoned due to the impact of U.S. export restrictions.
Image source: Getty Images.
What Lies Ahead for Alibaba
Despite continuing to slip in 2024, Alibaba faces a daunting road to recovery. As the Chinese economy remains lackluster, the company grapples with losing market share to Pinduoduo and its parent company, PDD Holdings, renowned for its deals-focused approach.
Although Alibaba’s revenue growth shows signs of improvement, ongoing challenges necessitate convincing investors of the potential for sustainable growth, free from external disruptions.
Should you invest $1,000 in Alibaba Group right now?
Before investing in Alibaba Group, consider this:
The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to buy now, and Alibaba Group was not among them. The 10 stocks recommended could potentially yield substantial returns in the years to come.
Stock Advisor equips investors with a user-friendly strategy for success, offering guidance on portfolio construction, regular updates from analysts, and two new stock picks each month. Since 2002, the Stock Advisor service has outperformed the S&P 500 by more than triple*.
Explore the 10 recommended stocks
*Stock Advisor returns as of January 8, 2024
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.