Is The Downside Risk In Alibaba Stock Priced In Ahead Of Earnings? Here's Why Kevin O'Leary Expects The Chinese E-Commerce Giant To Outperform

Alibaba Group Holding Ltd - ADR BABA shares have been on a downhill ride over the last two years amid increasing regulatory pressures in China, but one investor believes the only place the stock can go from here is up.

What To Know: O'Shares ETFs chairman Kevin O'Leary picked up shares of Alibaba in March after a JPMorgan analyst called Chinese stocks "uninvestable." O'Leary is confident holding the stock into earnings Thursday morning because he believes the downside risk is already priced in.

"It's baked into the stock that [this] will be one of the first quarters ever where we saw sales growth slow," O'Leary said Wednesday on CNBC's "Fast Money Halftime Report."

"The overall trend is your friend in terms of e-commerce in Asia and, you know, the China story and the ADR story is already baked into the stock," he added.

O'Leary expects Alibaba to outperform the S&P 500 over the next year, he said. He even suggested that Alibaba is a better bet than Amazon.com, Inc. AMZN at current levels.

"If you own Amazon, I don't know why you don't own BABA," O'Leary said. 

See Also: Jim Cramer Says Amazon Is 'Taking Share From Everybody': Here Are 3 Stocks The E-Commerce Giant Was Able To Outshine During Its 'Extraordinary' Quarter

Alibaba is set to report its fiscal first-quarter financial results before the market opens on Thursday. The China-based e-commerce company is expected to earn $1.52 per share on quarterly revenue of $30.05 billion, according to data from Benzinga Pro.

BABA Price Action: Alibaba has a 52-week high of $203.28 and a 52-week low of $73.28. The stock traded above $300 per share toward the end of 2020.

Alibaba shares were up 3.35% at $95.72 at market close. After hours, the stock is up 0.19% at $95.90.

Photo: Courtesy of Alibaba.