Analysts have lowered their price targets for Alibaba shares as e-commerce growth slows in China

By Paul Carsten BEIJING (Reuters) – Analysts cut their target price on Alibaba Group Holding Ltd shares after the company’s share price fell to a post-listing low on Wednesday amid weak earnings and concerns about China’s economy. Alibaba shares are currently trading at $73.38, hovering slightly above their initial public offering price of $68. The average price target dropped from $106.82 on Tuesday to $99.09 on Thursday, according to a Thomson Reuters survey of 46 analysts. Of these analysts, 41 recommend buying Alibaba stock. No one is suggesting a sale, even though the company has lost more than $100 billion in market capitalization since its November high. But behind Alibaba’s disappointing results lies a bigger threat to the company: The number of people shopping online is starting to grow, even in the relatively new mobile e-commerce space. The challenge for Alibaba is how to encourage shoppers to buy more even as China’s economy grows at its slowest pace in three decades, hitting everything from production to consumption. “The speedup they get is probably declining because there aren’t many non-mobile customers who will convert,” said Mark Natkin, managing director of Marbridge Consulting in Beijing. There are many factors that contribute to harassment of an e-commerce company. Growth in revenue and the total value of goods transacted on Alibaba’s platforms was the slowest in more than three years. The company has launched several projects to keep new users and money coming in. It is expanding internationally, trying to bring China’s untapped rural population online and offering online TV, movies and music. On Monday, Alibaba said it would invest in a brick-and-mortar retailer that would enable offline and online shopping to be linked. Despite these efforts, the number of people shopping online is starting to peak. The number rose 13 percent to 374 million in the year to June, according to the China Internet Network Information Center (CNNIC). Two years earlier it increased by 29%. Alibaba executives have touted the mobile shopping boom as a new customer breed worth taking advantage of, but here the slowdown is even more drastic. Mobile e-commerce is also less profitable than on personal computers. In the year ending June 2014, the number of mobile customers grew 168 percent to 205 million. Over the next 12 months, this number increased by one third. “There is often some benefit left in the form of untapped penetration, i.e. existing users who have not yet chosen to shop online,” said Marbridge’s Natkin. “The closer we get to the maximum penetration rate, the company should expect that it will no longer enjoy dividends in the future.” (Editing by Mark Potter)