Alibaba Group Holding Ltd (NYSE:BABA) ended its third consecutive red session with a marginal loss of 0.35%. The company has been hurt by the allegations of selling counterfeit goods and that is reflected in the stock price clearly as it is almost 30% away from the life high of $120, registered in November 2014 and just 5% above the 52 week low of $80.
Last week, Juanita Duggan, the president and CEO of American Apparel and Footwear Association (AAFA) lodged a complaint in relation to counterfeit goods to the chairman of the Securities and Exchange Commission, Mary Jo White. That complaint was followed by another one, filed with a representative of US Trade, Michael Froman. Those complaints refer to the Taobao platform of Alibaba proliferating counterfeit apparel and footwear.
Naturally, Alibaba Group Holding Ltd (NYSE:BABA) must overcome this torrent of negativity but the street is still upbeat about the result of the company. The revenue adjusted y-o-y growth is expected to come at 44.5% in 2015 and 34.7% in 2016. Estimates of Adjusted Gross Profit Margin stand at 69.3% in 2015 and 70.1% in 2016. The one thing that is expected to remain almost the same is Adjusted EBITDA margin, with 53.5% in 2015 and 53.4% in 2016. Estimates for Adjusted EPS growth y-o-y stands at 35.5% in 2015 and 28.4% in 2016.
Alibaba Group Holding Ltd (NYSE:BABA) is facing stiff competition from JD.Com Inc (ADR) (NASDAQ:JD). In the last 6 months this stock has outperformed Alibaba by a big margin as it kept rising even when Alibaba was declining.
All these negativities have created a weak technical structure for the stock and that is manifest in the Megaphone structure the decline has taken. This structure is seen when the bears are in complete control and the bearish momentum is actually increasing.
