Alibaba (NASDAQ: BABA) was one of the big movers on Thursday, hitting new all-time highs in the pre-market. The stock shot up over 13% almost immediately following news that the companies revenue was going to explode. This news wasn't rumor, it came from the company's CFO herself at an investor conference.
Investors jumped all over each other to try and gobble up shares as fast as possible as the company foretasted that their revenue would see a year-over-year increase of almost 50%. Though 50% may sound like a lot, analysts had already foretasted a whopping 35.8% increase. Still, the new guidance shocked the markets along with analysts which were supportive, not skeptical. Volume surged to its highest point of the year and shares closed almost right where they opened, up 13.29%.
For technical traders there is no arguing this trend. Since the start of the year shares have been in a slow and steady uptrend that has shown consistent volume as well. The question from this point is, is Alibaba overpriced in the short term? Technical traders will argue that prices are over bought after today's explosive move. Historically prices like to stay near their recent average and today's move puts it well above any recent average. You would expect many technical traders to patiently wait for small pullbacks that could lead to a better entry into this strong trend.
Fundamental traders will likely have a completely different view. The stock had mostly priced in the revenue expectations going forward but with this new announcement, analysts will likely begin to raise their price targets to reflect this anticipated growth. Given this news its likely that many fundamental traders will expect this move is just beginning, and baring any disappointments going forward that prices will hold steady here before beginning the next move higher.