Alibaba arrives at this week's note having just posted its biggest weekly gain since early 2025 — up 14.4% to $112.32 — yet underneath the price action, short sellers have been rebuilding quietly and options traders have swung to their most bullish tilt in months.
The positioning shift since last week's note is striking. Short interest has climbed from roughly 39.9 million shares to 42.3 million — a 6.2% jump on the week, compared to near-zero movement reported in the July 8 note. That's a clear change in behaviour: bears who sat on their hands for six weeks are now adding exposure. The lending market has loosened in parallel with the price move, which is the mechanical flipside of shorts reopening positions rather than being squeezed out. Availability has moved to 135% — meaning roughly 1.35 shares remain available to borrow for every one already lent — the easiest borrow conditions seen in several weeks, and up from the sub-100% levels of late June. Cost to borrow remains low at 0.44%, barely changed on the week. Borrow conditions are loose, not tight — the rebuilding shorts are getting in cheaply. Options, meanwhile, have flipped toward the bullish end of recent history. The put/call ratio dropped to 0.58, more than one standard deviation below its 20-day average of 0.63, touching the lower end of the past year's range. Calls are running well ahead of puts. That divergence — bears adding short exposure while options flow tilts bullish — is the central tension in the setup.
The Street broadly retained constructive ratings after the May earnings print, though the most recent analyst actions on record are from mid-May and should be read as a response to Q4 results rather than current news. JP Morgan held Overweight and lifted its target to $205, Barclays and Mizuho both raised to $195. With the stock now at $112, all of those targets imply meaningful upside — though the mean consensus target of roughly $1,288 is clearly a data artefact (likely a Hong Kong listing price mixed in) and should be ignored entirely. The valuation picture tells its own story: PE has contracted to about 12.7x, down more than four points over the past 30 days as the stock lagged before this week's rally, and EV/EBITDA has compressed to 8.4x. These are not demanding multiples for a company where forward EPS revisions have swung sharply higher — the factor score on 12-month forward EPS growth ranks in the 66th percentile. Against that, earnings momentum over the past 90 days is weak, ranking in just the 17th percentile, and EPS momentum over 30 days is in the 30th percentile. The bull case — strong cloud growth, 20% DAU gains in instant commerce — has not yet translated into near-term earnings delivery, which explains why the stock needed a 14% week just to get back toward where it was a month ago.
BlackRock added 3.6 million shares in the most recently reported period, lifting its stake to 128.5 million shares and making it the largest institutional holder at 5.5% of the float. FMR added 1.3 million shares and Hang Seng Investment Management added 827,000. Goldman Sachs trimmed by 1.9 million in Q1, and JPMorgan Chase cut 2.5 million by late June — two of the larger holders moving in opposite directions. The more notable insider event is President J. Michael Evans, who sold just under 720,000 shares on June 29 for roughly $68 million at prices near $94-95. That sale came before the bulk of this week's 14% move, an uncomfortable sequencing with August 13 earnings now less than four weeks away.
Alibaba's last two earnings prints have been directionally informative but contradictory in message. The May 13 result delivered a 4.7% one-day gain but gave it all back within five days. A print in May 2026 went the other direction — down 9.1% on the day. Average one-day move across recent history is roughly plus or minus 6-7%. The August 13 date is now the fixed point around which this positioning is crystallising: shorts rebuilding at a higher price, calls dominating puts, and a set of analysts who last updated targets two months ago at a stock that's moved significantly since. What to watch in the coming weeks is whether the short rebuild continues into earnings at the current pace — if it does, the setup into August 13 becomes considerably more charged than the relaxed picture reported just a week ago.
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