BABA
Goldman is removing Alibaba (BABA) from the firm's Conviction List but keeping a Buy rating on the shares with a price target of $215, down from $252. The firm notes, at the time when retail spending slows down and competitive intensity levels up, Alibaba has been increasing its investments on both defensive-offensive strategies to acquire new users, build multiple traffic sources, and in the shorter term raise merchant subsidies to retain merchants. The firm expects revenue growth to decelerate to 13%/16% in Q3/Q4. The firm also expects the aggressive buybacks to continue and the investment portfolio to be revisited, and believes the negatives have been priced. The firm is constructive on Alibaba on its extreme valuation.
