Alibaba’s Dip Is a Gift—Here’s the Price That Matters

Key Points

• Alibaba's chart shows a clear footprint of institutional buying, and also an opportunity for investors to start buying up at these ranges.
• Two specific prices act as evidence where multi-billion-dollar positions were taken recently.
• Analysts still think Alibaba could see up to 50% upside from today's prices.

Any investor who has been exposed to Chinese stocks has likely noticed a decline in sleep quality over the past few months. These names have become so volatile lately because of the same driving factor across the S&P 500 and the overall technology sector today. President Trump's recently implemented trade tariffs are at the forefront of the volatility investors are noticing today.

However, most of that uncertainty seems to have been cleared out now, as China and the United States have navigated a few rounds of negotiations to reach an understanding that benefits not only the two economies but also the stocks that depend on these forecasts being clear once again.

In this scenario, which offers a great risk-to-reward ratio with minimal downside left and significant upside potential, investors have one name to focus on.

That name is Alibaba Group NYSE: BABA. Alibaba is at the top of the list because it is one of China’s blue-chip stocks in its own technology space. This means it will likely receive the first round of willing buyers once certainty and confidence return to the scene.

Before any of these investors jump the gun too early, they should consider the stock's price action to find an optimal entry, which will likely price out some of these ongoing risks.

Rooted in Market Fundamentals: Alibaba’s Buy Target

When investors stretch out Alibaba’s chart for the near term, they will notice something odd about the $117.50 price, give or take fifty cents. A wide gap opened up in the first minutes of the opening bell in early June 2025. This is important on a technical level because gaps are usually revisited.

Digging into why this price should be revisited goes much further than a stock pattern. What likely happened here is that many buyers, excited about the prospects of China’s economy due to ongoing negotiations with the United States, were unable to secure the price they wanted for Alibaba, as the stock’s rapid rise made it challenging to obtain.

Those same buyers haven’t had a good enough dip since then; therefore, the state of mind driving their decisions is probably aligned with waiting for the opportunity to buy at what seems a good price, making that $117.50 gap significant for that objective.

If the future delivers that price, investors have two options. First, they will see a rebound happening relatively fast, confirming that this is the level most buyers were waiting for.

Second, they could see that fear takes over Alibaba, and the price will stop at $117.50 and then head a bit lower to seek even more willing buyers.

That is where Plan B comes into play and where the next sensible level should be kept on a chart. $111.50 made what’s called a “wick” on a candlestick chart, which means a similar situation to gaps. A big wick not only represents a missed opportunity for buyers but is also a common place where older buyers place their stops at the low of a given range.

With this in mind, there are probably many sell orders sitting at that price, where new buyers could “attack” them and ensure they get their pound of flesh at an attractive price for Alibaba.

Why Keep Alibaba in Mind?

Considering these two potential entries, investors must now justify a purchase. As investors now know, Alibaba is at the forefront of the inevitable wave of buying that could come about when a tariff deal sweeps through the markets.

That might be a reason why short sellers have decided to walk away from this setup, knowing that Alibaba is still dirt cheap relative to its all-time high of just over $315 per share. Investors can see this through the 16.9% decline in short interest that took place over the past month alone, a clear capitulation sign.

At the same time, Fawne Jiang from Loop Capital set a valuation target of up to $176 per share for Alibaba stock as of mid-May 2025. Considering that analysts don’t often back a stock subject to such negativity in the media, this call for up to 50% of today’s prices means much more than usual for Alibaba stock.

Considering that the setup in Alibaba is skewed to the upside, it also makes sense to see up to $4.7 billion worth of institutional capital flowing into the company, as indicated in the most recent quarterly reports. This is not only a sign of confidence but also confirmation that these large buyers were probably the footprint now seen in Alibaba’s chart at those $117.50 and $111.50 levels.