Is Alibaba Stock a No-Brainer Buy?
Alibaba (NYSE: BABA), once a Chinese growth powerhouse, faced a turbulent period as revenue growth fell to an all-time low in the fiscal year ending March 31, 2023. As its financial performance deteriorated, Alibaba's stock price fell to lows unseen in recent years.
Still, the latest quarter shows glimmers of hope with a reacceleration of revenue growth and improved profitability across its divisions. Is the worst over for the company? And more importantly, is the stock a buy now?
This article will address those questions.
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Alibaba has demonstrated early signs of recovery
Alibaba is a classic example of a fallen angel. Since going public in 2014, it has grown revenue by more than 30% annually. But everything changed in the last two years as the company faced a series of challenges, including a crackdown by the Chinese government, a COVID-19-induced slowdown, and competition from Pinduoduo and Douying.
Alibaba's result for the fiscal year ended March 31, 2023 reflected these challenges when revenue grew by just 2%. Worse, its crown jewel, the Chinese e-commerce business, reported a 1% decline in revenue for that year. Such a performance was unacceptable for a company that depended on e-commerce for most of its revenue and all of its profitability .