After being highly recommended by Citron Research, a firm known for its past short-selling of Chinese concept stocks, Alibaba's stock price soared.
On Thursday, May 16th, Eastern Time, Alibaba's US-listed Chinese concept stocks opened up 1.2%, rose in the morning, expanded to over 7% during the day, reached a midday increase of 7.5%, and then maintained an increase of around 7%, closing up 7.05%, marking a new high since November 15, 2023.
Wall Street News noted that before Alibaba's stock price surged in the morning, Citron posted on social media expressing optimism about Alibaba.
Citron stated that Alibaba is gaining momentum, with the stock price expected to break through $100, following the success of Microsoft and Amazon in China. Investors will recognize Alibaba's prospects in artificial intelligence (AI) cloud and strategic investments. Citron also pointed out that in the field of Large Language Models (LLM) in China, Alibaba's model TongYi QianWen stands out.
If Citron's prediction is correct, Alibaba's stock price will break through the $100 mark for the first time since July 2023, rising by at least 24% from Wednesday's closing.
Some netizens replied under Citron's post agreeing with the assessment, stating that both Alibaba and Baidu are severely undervalued and should be bought. Some suggested that Citron should also look into Pinduoduo, believing that Citron would also like this Chinese concept stock. Others believe that Citron, who has been out of the short-selling game for over three years, is now going long.
Founded in 2001 and focused on short-selling research for twenty years before announcing the cessation of short-selling research at the end of January 2021, Citron is one of the influential short-selling institutions in the United States. According to media reports, since 2006, Citron has shorted more than 20 Chinese companies including New Oriental, China Biologic, Qihoo 360, and Evergrande. In 2011, after Citron released a short report, Southeast Rongtong was forced to delist within four months.
Coincidentally, the day before Citron's post, Scion Asset Management, a hedge fund under the protagonist of the movie &#34;The Big Short,&#34; Michael Burry, disclosed that it had increased its holdings of Alibaba by 50,000 shares in the first quarter of this year. However, Alibaba is not the Chinese concept stock with the largest increase in holdings by Scion. In the first quarter, the fund significantly increased its holdings of another Chinese concept stock, JD.com, by 80%, surpassing Alibaba to become the fund's top holding, with Alibaba in second place
The day before Scion disclosed its holdings, Alibaba announced its first quarter of this year, the fourth quarter financial report has shown the strong momentum of Alibaba's AI Cloud. In the quarter, Alibaba Cloud's total revenue increased by 3% year-on-year to 25.595 billion yuan, with core public cloud product revenue achieving double-digit growth and AI-related cloud products achieving triple-digit growth. At the same time, Alibaba Cloud continued to maintain profitability, with adjusted EBITA profit increasing by 45% year-on-year to 1.432 billion yuan.
During the performance conference call after the financial report, Alibaba executives stated that the growth in cloud business revenue is mainly driven by new AI products. These AI products not only bring in additional revenue themselves but also promote the sales of traditional cloud computing products, especially in the public cloud sector. Project-based revenue for private cloud is decreasing, which has had a certain impact on overall revenue, but the revenue growth of public cloud and AI-related products has shown double-digit improvement in this quarter.
Alibaba's management believes that with the company's strong focus on AI, the commercial revenue of Alibaba Cloud will resume double-digit growth in the second half of the fiscal year.
Wall Street News subsequently mentioned that while providing cloud computing services for large-scale model customers, Alibaba Cloud is also developing its own open-source large-scale models. However, this is not to seize market share from customers, but to help industry technology grow faster through the open-sourcing of Alibaba Cloud's technology.
As of now, Alibaba's Tongyi large model has iterated to version 2.5. Recently, the latest evaluation results released by authoritative institutions show that Alibaba Cloud's Tongyi Qianwen 2.5 has matched the performance of GPT-4 Turbo in Chinese.
The release of the Tongyi model is, on one hand, to establish the company's AI ecosystem (adopting an open-source form), help the industry develop faster, expand the market, and increase the demand for AI cloud computing power; on the other hand, it is also to promote the development of AI applications. Based on this large model, developers can quickly build AI applications suitable for different scenarios, increase internal and C-end user growth, and thereby enhance the demand for cloud computing services. The rapid development of these two aspects can quickly drive the growth of Alibaba Cloud business

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Citron Research predicts that Alibaba's stock price is expected to break through $100, equivalent to a rise of at least nearly 24% from Wednesday's closing price, mentioning Alibaba's AI cloud prospects and strategic investments, and stating that Tongyiqianwen is a leading large model in China. Alibaba's financial report on Tuesday showed that AI revenue from cloud intelligence grew by triple digits year-on-year in the first quarter

Alibaba rose more than 7% intraday, and the former "Air Force" pioneer Citron Research predicts a surge of over 20%