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Alibaba enters the week of October 13 with a notable shift from the prior week's narrative: the stock has actually moved higher, and shorts are covering in size, two things that last week's note flagged as missing from the picture.
The price recovery is modest but real. BABA closed at $110.85 on October 13, up 1.5% on the week and 0.06% on the day, erasing last week's softness and recovering from the $107 print flagged in the previous note. The month-on-month gain is now 1.4%, a reversal from the 5.5% decline described just five days ago. Close peers JD and VIPS both added around 1% on the week, so the broad Chinese internet cohort moved in the same direction. was the standout, gaining 4.5% over the same period, suggesting some rotation into higher-risk China names rather than a pure BABA-specific catalyst.
The most concrete development this week is in short positioning. Short interest has fallen 11.5% over the past seven days, dropping from roughly 41 million shares to just under 36.4 million. That is the largest weekly reduction in the 30-day history shown in the data, and it extends a trend that has now trimmed shorts by 13.3% over the past month. The borrow market confirms the retreat: availability has expanded sharply to 210%, up 45% from a week ago and the loosest reading in the data window. At that level, there are more than twice as many shares available to borrow as there are currently shorted, leaving ample room for further short-building without any mechanical pressure. Cost to borrow has edged back up slightly to 0.51% from the 0.34% trough noted last week, but remains at the low end of the 30-day range and well below the 0.70% peak from late September. The ORTEX short score has drifted down to 47.3, its lowest reading in the 10-day history and down from 50 at the start of October, consistent with the easing short-side conviction.
Options positioning has not followed the covering move into bullish territory. The put/call ratio is running at 0.55, fractionally below its 20-day average of 0.56 and near the 52-week low of 0.53. The z-score of negative 0.54 means positioning is only marginally less hedged than usual, not a decisive call signal in either direction. With the next earnings date on November 19, options traders appear content to let the lending market normalize without loading up on either calls or defensive puts.
The Street is broadly positive but trimming at the margins. JP Morgan's Alex Yao lowered his price target to $200 from $210 on October 12, maintaining an Overweight rating, while Citigroup lifted its target to $193 from $190 a few days earlier with a Buy. Those moves pull in opposite directions, but the direction of travel from the August cluster of post-earnings raises remains intact: Barclays, Susquehanna, and JP Morgan all lifted targets after the August print. The mean analyst target sits around $200, a significant premium to the current $110.85 price, though the Benzinga bull case points to 5% revenue growth and a 20% rise in daily active users on the Taobao app following the integration of instant commerce, while the bear case centres on compressed China ecommerce EBITA margins and a quarterly loss exceeding RMB 36 billion driven by quick-commerce investment.
Ownership data adds one notable detail. SoftBank's stake, last disclosed in May 2025, had already fallen to 3.3% from a prior 8%, a significant reduction from when it was one of the defining holders of the register. The schedule 13G/A filing indicates this is a passive position, not an activist one, but the direction of travel over the past year has been firmly toward the exit. BlackRock and Vanguard remain the largest institutional holders, with BlackRock last reported adding 1.4 million shares as of September 30. Insider activity in the most recent 90-day window has been dominated by option exercises (transaction code M) rather than open-market purchases, with the one notable cash transaction being CPO Jiang Fang selling approximately $12 million of stock on September 30, not a 10b5-1 planned sale. Net insider activity over 90 days is technically positive at around $12.1 million, but that is driven almost entirely by exercise mechanics, not discretionary conviction buying.
The setup heading into the November 19 earnings date is cleaner than last week: short interest is down materially, availability is loose, and the stock has recovered a few points. What to watch now is whether the short covering flows reverse if the macro backdrop for China names sours again, and whether the options market starts pricing a larger post-earnings move as the event date draws closer.
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