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Alibaba's U.S. shares slipped 1.5% to $73.7 in premarket
trading, tracking a fresh one-year low. They are down 14% since
the company posted in line second-quarter revenue and scrapped
plans to spin off its cloud business.
Meanwhile, shares of PDD Holdings have surged following stellar
quarterly results from the Temu parent this week. The company
closed with a market capitalization of nearly $196 billion on
Thursday, surpassing Alibaba's market value of $190.45 billion.
Morgan Stanley analysts downgraded Alibaba to "equal-weight"
from "overweight", flagging concerns over softness in its
customer management revenue and cloud business due to sagging
economic recovery in China.
They also noted uncertainties from the decision to scrap the
spin-off of its cloud business.
The brokerage cut its price target on the stock to $90 from
$110, the second lowest on Wall Street, as per LSEG data.
Alibaba's U.S. shares, down about 15% so far this year, are set
for their third consecutive year of losses.
On the other hand, Morgan Stanley named PDD as its top pick in
the sector, saying the company is best placed to navigate the
current economic environment with its heavy discounting steps.
"We expect PDD to continue to gain share in the domestic market
thanks to its favorable business model amid consumers' behavior
shift," Morgan Stanley's Eddy Wang noted, adding that its
cross-border e-commerce business, Temu, is not fully valued by
the market.
PDD shares were down 1.4% premarket at $145.4 but have surged
more than 80% in 2023, handily outperforming its peers.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj
Kalluvila)
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