Shares of Alibaba Group Holding listed on the United States Stock Exchange fell on Friday after Morgan Stanley downgraded the company due to worries over a delayed turnaround in its major businesses. This occurred only hours after PDD surpassed its competitor to become the most valuable Chinese e-commerce company.

Alibaba’s shares reached a new all-time low of $72.5, showing a decline of 3.2% over the past year. The company’s shares have dropped by roughly 17% since it announced last month that its revenue for the second quarter was in line with expectations and that it had abandoned ambitions to spin off its cloud division.

On the other hand, the shares of PDD Holdings (PDD.O.) have increased significantly this week due to the Temu parent company’s outstanding quarterly results. The corporation’s market capitalization reached about $196 billion at the end of trading on Thursday, exceeding the market value of Alibaba, which was $190.45 billion.

Alibaba was downgraded from “overweight” to “equal-weight” by analysts at Morgan Stanley. They cited worries over the company’s customer management revenue and cloud business suffering from a lack of growth due to the slowdown in economic recovery in China.

In addition, they stated that Alibaba’s decision to abandon the spin-off of its cloud business was a source of uncertainty.

According to LSEG data, Morgan Stanley reduced its price goal for the company from $110 to $90, making it the second lowest among analysts in terms of price target. This is the third downgrade that Wall Street brokerages have issued in the same number of weeks.

With a decline of almost 18% this year, Alibaba’s shares in the United States are on track to see losses for the third year.

Morgan Stanley, on the other hand, has identified PDD as its top selection in the industry. The firm believes that it is in an excellent position to manage the present economic situation because of the significant discounting actions that it has taken.

“We expect PDD to continue to gain share in the domestic market thanks to its favorable business model amid consumers’ behavior shift,” Eddy Wang, an analyst at Morgan Stanley, stated. Wang also mentioned that the market does not properly appreciate PDD’s Temu business, which is a cross-border e-commerce platform.

The price of PDD shares was down 2.1% at $144.4, but they had increased by about 80% in 2023, more than double the performance of its competitors.

PDD has the highest forward price-to-earnings ratio among its competitors, including JD.com and Vipshop Holdings (VIPS.N), with a value of 21.4. According to estimates provided by LSEG, Alibaba’s forward PE is valued at $7.62.