Alibaba’s $164 Price Target: Fibonacci Mystique or Fundamental Reality?

Technical analysis often provides compelling narratives, and for Alibaba Group Holding, a price target of $164 has recently captured attention. This figure, as noted by the analyst TheLongInvest, aligns neatly with a 1.618 Fibonacci extension, a textbook target for a ‘Wave 3’ impulse in Elliott Wave theory. While such patterns can signal powerful momentum, they are best understood as maps of market psychology rather than prophecies. For a company like Alibaba, whose shares have been weighed down by a litany of fundamental concerns, the path to such a valuation requires a far more substantive catalyst than a clean chart formation.

The Technical Premise and its Limitations

Elliott Wave theory posits that markets move in predictable, repetitive cycles. A five-wave upward impulse is followed by a three-wave correction. The third wave is typically the longest and most powerful, representing the point where a new trend gains widespread recognition and institutional participation. The $164 target for Alibaba is derived from this framework, suggesting a potent rally is underway following a lengthy period of consolidation.

Supporting this view, the stock has recently shown signs of life, breaking above its 200-day moving average and establishing a series of higher lows. However, technical indicators are reflections of past price action and current sentiment; they do not, in isolation, drive future performance. For a sustained move of the magnitude implied by the Wave 3 thesis, a corresponding shift in the company’s underlying fundamentals or the market’s perception of them is a prerequisite. Without it, even the most elegant technical setup can fail.

A Valuation Conundrum

Alibaba’s primary appeal to contrarian investors is its seemingly depressed valuation. When measured against its global technology counterparts and even its own historical trading ranges, the company appears remarkably inexpensive. Yet, this discount is not without reason. The market has systematically de-rated the stock due to a persistent combination of risks.

These headwinds include intense domestic competition from rivals like PDD Holdings, an unpredictable regulatory environment in Beijing, and the overarching geopolitical friction between China and the United States. The result is a valuation that reflects deep-seated investor scepticism. A brief comparison illustrates this discount clearly.

Source: Data compiled from multiple financial data providers as of late 2024. Ratios are approximate and subject to market changes.

For years, Alibaba has screened as a ‘value trap’: a stock that appears cheap but remains so, or becomes cheaper, as its underlying business fails to meet expectations or as perceived risks fail to dissipate. For the market to justify a valuation approaching $164 per share, it would need to see a clear and sustainable path towards resolving these issues, something that has so far proven elusive.

In Search of a Fundamental Catalyst

If the technical chart is the map, a fundamental catalyst is the fuel required to make the journey. For Alibaba, the most plausible driver for a genuine re-rating lies in its strategic initiatives, particularly in high-growth segments. The company’s recent plan to raise approximately $1.53 billion through exchangeable bonds is a significant move.¹ The stated purpose of this capital is to bolster its cloud computing and international commerce arms, two areas critical to its future growth narrative.

This signals a deliberate effort to pivot towards businesses with higher multiples and greater global potential, potentially diluting the market’s focus on the slowing, hyper-competitive domestic e-commerce segment. A successful expansion and improved profitability in the cloud division, in particular, could compel analysts to adopt a sum-of-the-parts valuation model that assigns a higher worth to the company than its current consolidated multiples suggest.

Conclusion: A Hypothesis on the Re-rating Path

The $164 price target is an interesting landmark on a technical chart, but it is ultimately a distraction from the core issue. The defining question for Alibaba is not one of technical patterns, but of narrative. The stock will not surge towards that level on the back of chart momentum alone; it requires a fundamental re-evaluation by institutional capital.

Herein lies a more probable hypothesis: the path to a higher valuation is not a singular, explosive Wave 3 rally. Instead, it is more likely to be a slow, grinding process of narrative bifurcation. The true catalyst will be the moment the market begins to value Alibaba’s cloud and AI ventures independently from its legacy e-commerce business. If management can demonstrate sustained, profitable growth in these future-facing divisions, institutional investors may finally find a compelling reason to look past the macro noise and engage. The journey to a higher valuation will be driven by earnings reports and strategic execution, not by the elegant but insufficient logic of Fibonacci ratios.

References

1. Reuters. (2025, July 3). Alibaba looking to raise $1.53 billion through exchangeable bonds for cloud, commerce push. Retrieved from https://reuters.com/world/asia-pacific/alibaba-looking-raise-153-billion-through-exchangeable-bonds-cloud-commerce-push-2025-07-03

@TheLongInvest. (2024, November 18). [Have one guess where they got the $164 PT from? It’s exactly the 1.618 Fib, which is always the Wave 3 target.]. Retrieved from https://x.com/TheLongInvest/status/1858837786465349692