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Alibaba earnings preview: is the long winter over?


MongiIG

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Alibaba Group will announce September quarter results on November 16, 2023, US Eastern Time. Despite its robust financial performance in the past quarter, Alibaba’s stock prices have dropped 20% in the past three months, why?

image.pngSource: Bloomberg
 

 

Hebe Chen | Market Analyst, Melbourne | Publication date: Tuesday 14 November 2023 09:17

Alibaba earnings date

Alibaba Group will announce September quarter results on November 16, 2023 7:30 am US Eastern Time (November 16, 2023 8:30 pm Hong Kong Time).

Alibaba earnings expectations

                   

September Quarter

June Quarter            

YOY

EPS($)      

$2.12

$2.17

17%

Revenue ($)

$30.79B

$32.29B

6%

Source: Alibaba

BABA-eps.jpgSource: Nasdaq

Alibaba earnings key watch

Alibaba's journey out of its long winter appears to be more bumpy than initially anticipated. After enduring three years of harsh regulatory clampdown from the Chinese government, the tech giant was expected to breathe a new life this year.

In the June quarter, Alibaba did deliver a robust result, with a 14% year-over-year increase in revenue to RMB 234,156 million (US$32,292 million). Its income from operations surged by 70%, accompanied by exceptional cash flow: net cash flow provided by operating activities rose by 34%, and free cash flow experienced a remarkable 76% increase.

AlibabaJunquarter.jpgSource: Alibaba

Despite its robust financial performance in the past quarter, Alibaba has encountered notable challenges since the third quarter of the year, primarily stemming from an unexpectedly softening domestic consumer market in China. The world's second-largest economy transitioned into deflation territory in July, with producer prices experiencing a continuous decline for 13 consecutive months up to October. In fact, the 20% decrease in Alibaba's share prices over the past three months signals global investors' fragile confidence in the Chinese e-commerce giant. It is evident that investors remain skeptical about BABA's recovery trajectory moving forward.

Beyond its financial performance, a crucial aspect to monitor is Alibaba's progress in AI development. Just two weeks ago, on October 31st, Alibaba launched the latest version of its artificial intelligence model, a significant development aimed at competing with its US counterparts such as Amazon and Microsoft. As the leading cloud player in China by market share, Alibaba's potential expansion into the global market with its leading AI and Cloud capabilities could mark the beginning of a new era for the Chinese tech giant, provided it achieves success.

Alibaba earnings technical analysis

Turning to the weekly chart of BABA, following last week's retracement, BABA’s stock price has reached a crucial support level at $77-$80. Given that the price is currently trading below all its short-term and long-term trendlines, sellers may keep the pressure on the current support level, potentially sending the price to revisit its 12-month low at $74.

On the flip side, only a breakout from the Jan-Oct downward trendline could help the bulls stage a comeback, with overhead resistance located at $89-$90. Further clearance of the 100-day MA could usher in a rally toward the July highs near the $97-$100 handle.

BABA-weekly.jpg

Alibaba stock rating and IG sentiment

IG-sentiment.jpg
Rating.jpgSource: TipRanks/IG

 

 

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