Alibaba Group Holding Ltd (BABA)

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Bulls Blast Alibaba (BABA) Stock Despite Earnings Miss
By: Schaeffer's Investment Research | May 14, 2024

• Alibaba's profits for the fiscal fourth quarter fell 86%

• Revenue still came in above analysts' estimates, though

Alibaba Group Holding Ltd (NYSE:BABA) stock is down 5.9% at $79.60 at last check, after the e-commerce company's profit for the fiscal fourth quarter plunged 86%, missing analysts' estimates amid cautious consumer spending in China. Revenue still impressed, however, thanks to a focus on low-cost goods.

Today's pullback found support at the $78 region, after the equity yesterday hit its highest level since November. The 20-day moving average also lingers below as a potential floor, as BABA clings to a slim 2.9% year-to-date lead.

Options volume is already running at four times the intraday average, with 161,000 calls and 60,000 puts traded so far. The most active contract is the May 85 call, followed by the June 95 call.

This penchant for bullish bets is far from being the norm. Alibaba stock sports a Schaeffer's put/call open interest ratio (SOIR) that ranks in the 87th percentile of readings from the last 12 months. This means short-term options trades have been much more bearish than usual.

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