Alibaba Stock News and Forecast: BABA shares rise on Ryan Cohen stake

Alibaba (BABA) stock is countering market weakness early Tuesday after news arrived that Ryan Cohen, the founder of Chewy (CHWY) and later the king of meme stocks, has taken a large stake in the Chinese ecommerce leader.

BABA stock has advanced 0.8% in Tuesday's premarket even as the NASDAQ futures have fallen 0.3%. A report that China's population dropped in 2022 by a little less than 1 million has roiled markets.

Alibaba stock news: Ryan Cohen pushes for buybacks

The chairman of GameStop (GME), Ryan Cohen is a much-watched guru in the markets by many retail investors, although his star lost some glimmer last year when he suddenly ditched Bed Bath & Beyond (BBBY) stock after acting like he would become a long-term shareholder. Now the thirty-something's focus has moved east.

Although The Wall Street Journal was unable to verify Ryan Cohen's precise ownership stake, sources told the newspaper that it is worth hundreds of millions. Alibaba stock is already up 27% this year, and long-term fans are hoping that Cohen's popularity may help the Chinese megacap regain its lost momentum. BABA stock lost more than 75% of its value after founder Jack Ma criticized Chinese regulators in the fall of 2020 followed by the Chinese authorities suspending the IPO of Ant Group, of which Alibaba owns a third.

The Wall Street Journal and Reuters are reporting that Ryan Cohen is pushing for Alibaba to speed up its buyback program. In November the board added an additional $15 billion to the earlier allocation of $25 billion. The program however lasts through 2025, and Cohen would like the company to strike while the share price is down. Reports say that Cohen has pushed the board, which he reached out to as early as last August, to raise the buyback allotment to $60 billion – an additional $20 billion of powder.

Cohen is also said to have argued to the board that growing free cash flow by 20% annually o–ver the next five years is a real possibility. Cohen has once again claimed that his intentions are long-term in nature. 

A number of investment banks have raised their price targets on BABA this month. Morgan Stanley raised from $100 to $150, Barclays raised from $114 to $141, and Citi raised from $144 to $160.

Alibaba stock forecast

The main target for traders, however, is $125. This comes from the resistance at that price level from the first half of July 2022. Beyond there is further resistance, and thus a bullish target, at $138.70. That price is the high from January 12, 2022 – almost exactly one year ago. If BABA falters, then expect sellers to push it down the the former supply zone between $103 and $105 that will likely form a supportive region.

BABA daily chart