Alibaba Group (BABA), the Chinese e-commerce giant, is among the best-performing stocks of 2017, with shares more than 95% higher so far this year. But one technical analyst from Miller Tabak is warning the stock could fall ahead of fiscal second-quarter earnings, which the company is slated to report Thursday before markets open.  

In an interview with CNBC, Miller Tabak analyst Matt Maley said the stock is looking vulnerable largely because of the run-up in shares all year. He said that while shares have stayed above their 50-day moving average for most of this year, in the past few weeks it has started leveling off, with it trading below its 50-day average for the first time in 2017 last week. "Right now after such a big run, I'm kind of middle of the road, and the next couple of weeks are going to be very key, whichever way it breaks," said Maley in the interview. "It will either rally further or it rolls back over. It's going to be very key over the next few weeks." (See also: Alibaba Cloud May Soon Be No. 2 After AWS: Exec.)

Covering Bets

For the three months ended in September, Wall Street is looking for earnings of $1.04 a share and revenue of $7.8 billion. In the year-ago September quarter, the Chinese online retailer weighed in with earnings of $0.63 and revenue of $5.17 billion. Alibaba has been able to blow past earnings and revenue estimates all year, which has lifted the share price and the fortunes of its investors. Analysts have been raising their price targets and ratings in kind as a result of the strong showing out of the online retailer. Last month, Goldman Sachs predicted that the retail environment in China should remain strong with Alibaba being the biggest beneficiary. (See also: Alibaba Surging on ‘Robust’ Retail Sector: Goldman.)

Shorts have even thrown in the towel. Last month, Jim Chanos, founder of Kynikos Associates, who has been an outspoken critic of Alibaba, told CNBC he covered his short bet in January. “ I still have problems with Alibaba’s accounting, but for the time being we’ve moved on,” said Chanos. The investor still expressed concerns about the company’s business model and financial disclosures. He also pointed out that the company’s balance sheet is growing at a faster rate than its businesses, namely its logistics unit. In addition to pouring money into logistics, the company announced a $15 billion investment aimed at creating a network of research labs around the globe to focus on future technology. The Chinese retailer plans to set up research facilities during the next three years in China, the United States, Russia, Israel and Singapore. The focus of the labs will be on advanced technology such as Internet of Things, fintech​, artificial intelligence and quantum computing.

 

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