Alibaba Group Holding Ltd (BABA)

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The “Call”… Alibaba and the 8 Analysts
By: Wolf Street | August 29, 2018

OMG! Another laugh-out-loud, gut-buster of an investor call. Come on guys, you’ve gotta stop it.

Let’s take a look at what happened once Alibaba’s YUGE! “61%” number hit the street at 7:30 AM on Thursday August 23rd. Pre-market generally went nuts, pushing the opening number up $7, to $184 from the prior day close of $177. Once the market opened,BABA average daily volume (20 million shares +/-) was traded in roughly the first hour of the trading day at about $184, occasionally caressing $186.50 with 2x average daily volume traded by 11:00AM.

The links to the folderol that caused all of the initial hubbub Alibaba’s earnings Press Release, Webcast, Presentation, and 6-K (Filed with the SEC on 2018-08-23 “end of day”).

Once “professional” investors and commentators had a chance to analyze the presentation, and most importantly the Q&A of the investor call, the mood evolved from euphoria to “what the hell?” and BABA ended the day down $5.75, a $15 swing from top to bottom. Of the 990 prior trading days since the IPO, Thursday, August 23rd, at almost 78 million shares, was the fifth highest volume day on record.

The reason this happened (among other things) has to do with the difference between professional investors and amateur investors.

I also want to acknowledge that the Analysts on the call did a fantastic job of probing the inner meaning and real implications of management’s comments. Based on what’s expected from analysts today, they did an awesome job of signaling the markets and professional investors as to what’s actually going on!

First, not once — with the exception of Alicia Yap at Citi and her “congrats on solid results” comment — did any analyst offer any adulation regarding the quarterly results. Note: In today’s vernacular, the term “solid results” usually refers to a business teetering on bankruptcy which managed to somehow reduce the quarterly loss.

Second, the Analysts bravely and cleverly walked, and never crossed, the ever-so-thin line between pissing management off, getting tossed off the call, risk being referred to as “that asshole analyst” on Twitter forever, and actually doing their job. Bravo!

We live in a world where everything is a “strong buy.” Today, a “strong buy” can mean anything from “Hey, this stock is actually a strong buy! No kidding!” to “Run for the hills!” That said, it has become all the more important to understand the nuances buried in the dialogue between analysts and management on these investor calls, to differentiate the levels and gradations of “strong buy.”

To that end, as a public service, we deploy my patented Dick Fuld Banker-Speak Translator [BST], to fully analyze the implications of the analyst Q&A on the Alibaba investor call. The BST will read between the lines, probing what the analysts were “really” asking. As usual, management’s responses were largely irrelevant, so we’ll ignore them for now (earnings call transcript via Seeking Alpha).

Here are the eight hard-hitting, laser-focused questions the eight analysts asked:

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