Alibaba Shares Hit New Low: Price Target Cut, Analyst Remains Bullish

Alibaba Group’s shares (NYSE: BAB) are trading near $100 on the New York Stock Exchange, marking a 35% decline year-to-date in 2026 and establishing fresh lows for the Chinese e-commerce giant. Sentiment has been bearish for some time, and with BABA making new lows at $100.48 on the day, a price target cut did little to help holders, at least at first glance.

Daiwa Securities slashed its price target to $175 from $200, albeit maintaining a Buy rating, citing disappointing results from China’s flagship 6.18 shopping festival that signal deeper structural challenges in the country’s consumption landscape.

Why are Alibaba shares down?

The stock’s descent to multi-year lows reflects mounting concerns over China’s economic trajectory and the sustainability of growth in its once-booming e-commerce sector. Despite trading at what analysts characterize as “undemanding” valuations, Alibaba has been unable to escape the gravitational pull of weak consumer sentiment and an increasingly competitive platform environment.

Markets reacted negatively to Daiwa’s dual message: while the firm retained its bullish stance on Alibaba specifically, it downgraded China’s entire e-commerce sector from Positive to Neutral. The sector-wide reassessment underscores a fundamental shift in how Wall Street is pricing the growth potential of Chinese internet platforms, moving away from the high-growth narratives that once commanded premium multiples.

The catalyst for Daiwa’s price target reduction was data from the 2026 6.18 shopping festival, China’s mid-year equivalent to Singles’ Day. According to research firm Syntun, overall gross merchandise value across major platforms reached approximately 934 billion RMB during the promotional period, representing growth of just 0.9% year-over-year. This marks a dramatic deceleration from the 15% increase recorded during the 2025 festival and constitutes what Daiwa termed a “negative surprise” for the sector.

The anemic growth confirms what many China watchers have suspected: Chinese consumers are pulling back on discretionary spending amid economic uncertainty, employment concerns, and a prolonged property market downturn. The 6.18 festival has historically served as a reliable barometer for e-commerce health, making this year’s flat performance particularly concerning for platform operators and their investors.

Within the broader sector weakness, Alibaba’s Tmall platform maintained its position as the largest player by GMV. However, market leadership provides little comfort when the entire pie is barely growing. The company faces intensifying competition from short-video platforms like Douyin and value-focused rivals such as Pinduoduo, which have been gaining share through aggressive promotions and innovative live-commerce formats.

Daiwa’s research note outlined several structural headwinds constraining sector growth. The firm pointed to a “tough” macroeconomic backdrop characterized by sluggish retail sales and weak consumer confidence. Recent data showed some months in 2026 recording negative year-over-year growth in overall retail sales, marking the first such declines since late-2022 COVID lockdowns. While online retail continues to outperform physical stores, the growth rate has moderated significantly as the channel matures and faces its own saturation challenges.

Regulatory pressures

Regulatory pressures continue to weigh on platform economics. Chinese authorities have maintained their push for platforms to avoid excessive discounting, anti-competitive practices, and data misuse while supporting small and medium-sized enterprises. These policy guardrails, though more predictable than the sweeping crackdowns of 2020-2021, nonetheless constrain take rates and limit aggressive monetization strategies that platforms historically employed to drive margin expansion.

The analyst also highlighted the scaled-back national trade-in program as a growth headwind. Government subsidies for consumer durables, which had provided a boost to big-ticket online sales of electronics and appliances, have been reduced compared to pandemic-era stimulus levels. Combined with a high base effect from years of promotional intensity, these factors are capping the sector’s ability to deliver meaningful growth acceleration.

Despite the cautious sector view, Daiwa’s decision to maintain a Buy rating on Alibaba specifically reflects the firm’s belief that the company remains better positioned than peers within a challenged environment. The $175 price target, while reduced, still implies approximately 75% upside from current levels, suggesting conviction in Alibaba’s long-term earnings power and cash-flow generation capabilities.

Plenty of upside to latest price target

Alibaba’s investment case rests on several pillars beyond its core commerce operations. The company maintains a dominant position in China’s cloud computing market and has been investing heavily in artificial intelligence capabilities. Management has signaled substantial AI-related capital expenditures, positioning the cloud division as a potential growth driver as enterprises adopt AI tools. The 2026 6.18 festival was characterized by some observers as a “breakthrough year” for AI integration in Chinese e-commerce, with platforms deploying the technology across logistics, customer service, and personalized recommendations.

The company’s diversified ecosystem spanning logistics, fintech, local services, and overseas commerce provides revenue streams beyond domestic online retail. This breadth theoretically offers resilience against weakness in any single segment, though in practice, China commerce remains the dominant profit contributor and sets the tone for overall sentiment.

From a valuation perspective, Alibaba trades at multiples that appear modest relative to its historical range and compared to global e-commerce peers. The company generates substantial free cash flow and maintains a strong balance sheet, attributes that value-oriented investors find compelling. However, as Daiwa’s note emphasizes, low valuations alone may not be sufficient to drive outperformance if earnings estimates continue trending downward.

The tension between “cheap” multiples and deteriorating fundamentals has defined Alibaba’s investment narrative for much of the past two years. Bulls argue that the market has over-discounted regulatory risks and that any stabilization in Chinese consumption or policy support measures could trigger significant multiple expansion. The stock’s position at new lows despite massive upside to analyst price targets suggests deep skepticism among market participants about the achievability of those targets under current conditions.

Bears counter that the structural growth rate for Chinese e-commerce has permanently reset lower, that competition will continue eroding margins, and that regulatory uncertainty remains an ever-present overhang. The 6.18 data lends credence to this view, showing consumers have become more rational and price-sensitive, favoring value and durability over volume. This behavioral shift reduces the effectiveness of promotional events and makes it harder for platforms to drive transaction frequency and basket sizes.

The split on the street

The Daiwa call encapsulates the conflicted sentiment surrounding Alibaba: strategically bullish on the company’s long-term prospects and valuation, yet tactically cautious about the near-term operating environment and sector dynamics.

For now, the bearish forces appear to have the upper hand, with weak consumption data and earnings revision risk outweighing the appeal of low multiples and substantial upside to price targets. Whether Alibaba can reverse its downward trajectory will depend on factors largely beyond management’s control, including the trajectory of Chinese economic growth, consumer confidence, and the regulatory landscape for platform companies.