Home > Boards > Free Zone > Big Board Trading - Technical > $Stock*Shop*Charts*News*Option$

Alibaba (BABA) stock has taken a hit from

Public Reply | Private Reply | Keep | Last ReadPost New MsgNext 10 | Previous | Next
DiscoverGold Member Profile
Member Level 
Followed By 577
Posts 80,324
Boards Moderated 45
Alias Born 03/10/04
160x600 placeholder
Top Company News of the Day
The FDA's authorization expands the drug's use to fight Covid-19 to people under the age of 12.
Soybeans Futures Higher on Export Hopes - Daily Grain Highlights
FDA Expands Emergency Use for Lilly Antibody Combination for Covid-19 to Include Infants
Front Month Nymex Natural Gas Fell 24.56% This Week to Settle at $4.1320 -- Data Talk
Front Month Nymex RBOB Gasoline Fell 1.42% This Week to Settle at $1.9529 -- Data Talk
Merck in Supply Agreement With Canada for Antiviral Medicine for Covid-19
Trade Deficit, Consumer Prices on Deck -- Data Week Ahead
Sportsman's Warehouse Shares Fall 19% After Takeover Deal Terminated
EURO STOXX 50 Index Ends the Week 0.23% Lower at 4080.15 -- Data Talk
FTSE 100 Index Ends the Week 1.11% Higher at 7122.32 -- Data Talk
DAX Ends the Week 0.57% Lower at 15169.98 -- Data Talk
CAC 40 Index Ends the Week 0.38% Higher at 6765.52 -- Data Talk
STOXX Europe 50 Index Ends the Week 0.20% Higher at 3613.81 -- Data Talk
STOXX Europe 600 Index Ends the Week 0.28% Lower at 462.77 -- Data Talk
FTSE Closes Down Amid Persistent Growth Fears
Roche to Name New Member to Board of Directors, Re-Elect Chairman
Adobe Down Over 6%, On Pace for Largest Percent Decrease Since March 2020 -- Data Talk
U.S. Services Sector Growth Accelerated to New Record-High in November -- ISM
U.S. Services Sector Growth Cooled Slightly in November -- IHS Markit
FTSE Edges Higher, Wickes's Margin Outperformance Leads to Further Upgrades
U.S. Nonfarm Payrolls Up 210K in November, Unemployment Rate 4.2% -- Update
Johnson & Johnson's Janssen Says Psoriatic Arthritis Trial Meets Objective
Bostic Wants to Speed Up Fed's Asset Buying Taper; Quarles Says Fed Will Need to Raise Rates
U.S. Nonfarm Payrolls Up 210K in November, Unemployment Rate 4.2%
Bristol Myers Squibb Gets FDA Acceptance of sBLA for Reblozyl
FTSE Edges Higher, Service Sector Kept Growth Momentum in November
DiscoverGold Member Level  Friday, 07/30/21 05:52:01 PM
Re: None
Post # of 612774 
Alibaba (BABA) stock has taken a hit from China crackdown, but its earnings could be a different story
By: Emily Bary | July 30, 2021

• Alibaba earnings preview: After big decline in stock price amid China moves against big tech companies, Alibaba is likely to show strength with results that include 6.18 shopping festival

Alibaba Group Holding Ltd. will be looking to focus attention back onto its business Tuesday following a rough stretch for the broader Chinese internet sector.

Chinese technology stocks have taken a hit in recent weeks amid concerns about a government crackdown on powerful technology companies. China has clamped down on ride-hailing giant Didi Global Inc. DIDI, +4.56% just after its initial public offering, and has more recently targeted online-education companies in the country.

Alibaba BABA, -1.19% is no stranger to regulatory action in China, having paid a $2.8 billion antimonopoly fine earlier this year over its treatment of some merchants that wished to sell on other platforms. The company also has a 33% stake in Ant Group Co., the Jack Ma-affiliated financial-technology company that will be subject to government oversight after regulators cracked down on Ant’s sprawling business and put a halt to an initial public offering that was expected to be the biggest in history.

The moves have sparked fears that the Chinese government plans a tougher tack on private companies more generally, which could pose risks for U.S. investors. With this backdrop, Alibaba’s U.S.-listed shares fell 13.9% in July, their worst monthly performance in more than two years.

“We believe most of these new regulations do not impact Alibaba, though clearly investors are concerned over increased regulatory focus,” Raymond James analyst Aaron Kessler wrote in a note to clients.

The regulatory narrative has dominated lately, but Alibaba can try to draw more focus to its own story when it reports June-quarter earnings Tuesday morning. The results will show how the overall Chinese e-commerce landscape is faring, as well as what progress Alibaba has been making in lower-tier Chinese cities, where it’s been investing heavily to grow its business.

China’s 6.18 shopping festival fell during the quarter, and the company’s commentary about merchant participation left Truist analyst Youssef Squali feeling “encouraged by Alibaba’s strong performance this 6.18 amid an increasingly competitive Chinese e-commerce landscape.”

Strong results in the commerce business could help distract from the regulatory issues that are outside Alibaba’s control, noted Baird analyst Colin Sebastian.

“Regulatory overhang may begin to ease as business fundamentals prove to be largely intact,” he wrote in a note to clients, though he’s taking a measured approach when looking at the most recent quarter. “While the macro environment in China has largely stabilized, retail sales growth has moderated slightly through the quarter and likely limits significant near-term upside.”

What to watch for

Revenue: Analysts tracked by FactSet expect that Alibaba posted RMB209.1 billion in revenue during its fiscal first quarter that ended in June, up from RMB153.8 billion a year earlier. The estimate includes RMB183.6 billion in revenue from the core commerce business.

Earnings: The FactSet consensus calls for RMB14.33 in adjusted earnings per share during the June quarter, down from RMB14.82 a year prior.

Stock movement: Alibaba will be looking to snap a streak with its coming report, as its shares have fallen in the session following its last seven earnings reports. Alibaba shares have lost 23% over the past 12 months as the KraneShares China Internet ETF KWEB, -2.55% has declined 24% and as the S&P 500 SPX, -0.54% has risen 35%.

What else to watch for

Alibaba said in its last earnings release that it planned to invest all of its incremental profits back into the business during this current fiscal year, and investors will be looking for more context on those investments on the coming earnings call.

The company is putting money behind a number of areas, including Taobao Deals, which is targeted at price-conscious consumers, and New Retail, which seeks to merge the online and offline shopping experiences.

“Considering the importance of these investments and their dilutive effect to overall margins, we believe that additional insight and disclosures around this topic would be positive for the stock in the short and medium term,” Truist’s Squali wrote.

“All that said, we remain encouraged by the company’s willingness to invest against these massive growth opportunities and protect its turf against rising platforms like Meituan 3690, -5.87% and Pinduoduo PDD, -0.53%, which should expand Alibaba’s customer base into China’s lower tier-cities, less affluent shoppers, drive engagement and frequency, and ultimately share of wallet,” he continued.

Another area to watch will be the cloud business. Mizuho analyst James Lee expects revenue for that segment to be in line with the 38% consensus growth forecast, which would “reflect the loss of a major international contract from last quarter.” He notes that the segment is looking to ramp up its sales force.

Read Full Story »»»


Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
• DiscoverGold
Public Reply | Private Reply | Keep | Last ReadPost New MsgNext 10 | Previous | Next
Follow Board Follow Board Keyboard Shortcuts Report TOS Violation
Current Price
Detailed Quote - Discussion Board
Intraday Chart
+/- to Watchlist
Consent Preferences