The Zacks Analyst Blog Highlights: Alibaba, Baidu, Facebook, Apple and Google

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Oct 01, 2014, 09:30 ET

CHICAGO, Oct. 1, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Alibaba (NYSE:BABA-Free Report), Baidu (Nasdaq:BIDU-Free Report), Facebook Inc (Nasdaq:FB-Free Report), Apple (Nasdaq:AAPL-Free Report) and Google (Nasdaq:GOOGL-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday's Analyst Blog:

Alibaba Slumps in First Week, Bearish Investors Profit

Alibaba (NYSE:BABA-Free Report) shares dropped 3.7% to $90.46 last week after having risen 38% in its Sep 19 debut on the New York Stock Exchange.

Why the Decline?

Alibaba made a bumper debut with a $25 billion initial public offering in the midst of reports that pointed toward China's slowing economy due to a decline in the housing market. According to the National Bureau of Statistics, new-home prices dropped in 68 of the 70 cities last month, including Beijing and Shanghai. This drop was the highest since Jan 2011 when the government altered the way it collected the data.

The economic slowdown in China is extremely critical as Alibaba derives almost 90% of its sales from the country. It may find difficult to continue to grow.

Good News for Bearish Investors

Bearish investors who make profits when prices decline made their initial bets on a retreat in Alibaba, and this increased the shares sold short to 12.1 million on Sep 25. The weekly decline in Alibaba curtailed its advance since the IPO to 33%.

According to Bloomberg and Markit, about 3.3% of Alibaba's listed shares have been sold short. While the amount was small relative to the total shares outstanding, it is significant considering the limited shares available to borrow after the IPO.

However, the decline in Alibaba's stock could also have been caused by sales from investors who bought shares in the IPO and are now selling with a profit.

Reports that Suggest Economic Slowdown in China

A Bloomberg index, consisting of the most-actively traded Chinese companies in the U.S., pared 1.8% for the week.

The KraneShares CSI (KWEB) China Internet Fund reported its third weekly decline and is on track for the first monthly drop since April. Baidu (Nasdaq:BIDU-Free Report) and Tencent Holdings Ltd are a part of this fund.

Governments Response:

The Chinese government announced that it will not make any major policy changes in response to the economic indicators despite the fact that data from factory output to retail sales show that economic growth is losing momentum. The housing market, as mentioned previously, also indicated the same.

Alibaba, which beat Facebook Inc (Nasdaq:FB-Free Report) in terms of market capitalization on its debut, currently carries a Zacks Rank #3 (Hold).

However, in size, it trails the likes of Apple (Nasdaq:AAPL-Free Report) and Google (Nasdaq:GOOGL-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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