Alibaba's low growth may be a longer-term headwind than previously thought, according to Bernstein.
The firm downgraded Alibaba stock to market perform from outperform on Tuesday.
"We upgraded Alibaba a year ago on the basis that the stock had discounted perpetual low growth, and that reopening would help support growth via better category mix.
Alibaba's shares have traded in a range since — but while they remain cheaply valued, perpetual low growth no longer feels like an aggressive bear case," analyst Robin Zhu said.
Zhu added that Alibaba is also contending with more issues beyond low user engagement and pointed toward higher search costs stemming from merchant crowding which is hitting merchant return on investment.
Persons:
Bernstein, Robin Zhu, Zhu, BABA, Michael Bloom