U.S. stock index futures were lower on Thursday as investors assessed mixed economic data for clues on the path of future rate hikes by the Federal Reserve, while Kohl's shares fell after the department store chain withdrew its annual forecasts.
The operator of Canadian coffee chain Tim Hortons in China said on Thursday it had forged a two-year partnership with Alibaba Group's grocery chain that will see the two launch co-branded products.
(RTTNews) - Chinese e-commerce giant Alibaba Group Holdings Ltd. (BABA) reported Thursday that its second-quarter net loss attributable to ordinary shareholders was RMB20.56 billion or $2.89 billion, compared to last year's profit of RMB5.37 billion.
China's Ant Group on Thursday logged net profit of 7.72 billion yuan ($1.08 billion) in the quarter to June, down 63.2% from a year earlier, according to Reuters calculations from Alibaba Group Holding Ltd's earnings report.
Chinese e-commerce giant Alibaba Group Holding Ltd posted a smaller-than-expected rise in quarterly revenue on Thursday as COVID-19 curbs and a worsening economic outlook stifled consumer spending.
Chinese e-commerce giant Alibaba Group Holding Ltd posted a smaller-than-expected rise in quarterly revenue on Thursday as COVID-19 curbs and a worsening economic outlook stifled consumer spending.
Chinese e-commerce giant Alibaba Group Holding Ltd. (
NYSE:BABA
) is set to release its second quarter Fiscal 2023 results on November 17, before the market opens.
The Street expects
BABA to post an adjusted profit of $1.68 per ADS in Q2, significantly lower compared to the year-ago quarter figure of $1.74 per ADS. Meanwhile, revenue is pegged at $29.34 billion, 5.8% lower than Q2FY21 revenue of $31.15 billion.
Factors Affecting Alibaba’s Performance
A slew of macroeconomic headwinds, including COVID-19-related lockdowns in China, intense competition, and sluggish growth, may have impacted Alibaba’s retail sales performance during the second quarter. At the same time, U.S. restrictions on chip exports to China stand to deteriorate Alibaba’s Cloud business.
Last month, the National Bureau of Statistics of China reported that the total retail sales of consumer goods (except automobiles) rose 1.2% year-over-year in September. Similarly, for the nine months ending September, the figure grew a modest 0.7%, indicating a slow but steady improvement in retail sales.
Additionally, the news that the figure for online retail sales of physical goods jumped 7.2% between January to October has pushed the shares of Chinese tech companies higher today. BABA stock is up 11.4% in pre-market trading on the news at the last check.
Moreover, an
improvement in the global website traffic visits at Alibaba shows that the tides may be turning favorable for the e-commerce giant.
Is Alibaba Stock a Buy, Sell, or Hold?
Despite the near-term challenges, analysts remain highly optimistic about Alibaba’s long-term potential. With nine unanimous Buys, BABA stock commands a Strong Buy consensus rating. Also, the average Alibaba price target of $137.78 implies an impressive 93.2% upside potential to current levels. Meanwhile, the stock has lost 40.8% so far this year.
Also,
Alibaba currently trades at a relatively low Price/Sales ratio of 1.83x, reflecting that the stock is favorably positioned for a high upside swing once the headwinds are behind.
Ending Thoughts
Alibaba is reeling from the macroeconomic headwinds and regulatory challenges that are impacting the majority of Chinese stocks. Nonetheless, Alibaba boasts a solid moat and stands to benefit the most once the headwinds are cleared. Analysts, too, are extremely bullish about the stock’s trajectory going forward. Furthermore, a recovery in online retail sales, the re-opening of the Chinese lockdowns, and related supply chain easing will lead to a full-throttle recovery for Alibaba’s business.
Disclosure
The following companies are expected to report earnings prior to market open on 11/17/2022. Visit our Earnings Calendar for a full list of expected earnings releases.Alibaba Group Holding Limited (BABA)is reporting for the quarter ending September 30, 2022. The internet company'
The NASDAQ 100 Pre-Market Indicator is down -42.29 to 11,828.86. The total Pre-Market volume is currently 46,898,519 shares traded.The following are the most active stocks for the pre-market session: Viatris Inc. (VTRS) is unchanged at $11.32, with 10,086,456 shares traded. VTRS
If immediacy bias represents an upside catalyst for publicly-traded securities, Alibaba (
NYSE:BABA
) deserves special attention. Against both wider fundamentals as well as company-specific tailwinds, BABA stock appears poised for significant gains following a rough year. However, the damage that its home nation of China inflicted regarding its zero-COVID policy may be too much for Alibaba to overcome. Thus, investors should consider selling BABA stock into strength.
For those that plan on exiting the Chinese e-commerce giant, they’re going to need to think quickly. The company will disclose its results for its fiscal second quarter on November 17. As TipRanks reporter Amit Singh mentioned, “Alibaba has
exceeded analysts’ earnings estimates in the last three consecutive quarters. As for Fiscal Q2, analysts expect Alibaba to
post earnings of $1.67 a share.”
To be fair, though, Singh also acknowledged the rough road BABA stock encountered this year. Nevertheless, certain circumstances shifted positively for the underlying business. Specifically, “TipRanks’ Website Traffic screener shows that the number of visits to alibaba.com and its two other websites (aliexpress.com and taobao.com)
increased 36.4% (sequentially) for the September ending (Q2) quarter.”
Further, the “impact of improving traffic is also reflected in Alibaba’s strong performance during the 11.11 Global Shopping Festival [Singles Day]. The company announced that its GMV (Gross Merchandise Volume) performance was in line with the prior year despite macro concerns.”
On a wider level, China recently relaxed its draconian zero-COVID policy. Unlike most other countries, China remained aggressively committed to subduing COVID-19 breakouts rather than attempting to live with the pandemic through vaccinations and localized mitigation measures. However, the severe response to the global health crisis also damaged its economy.
Unfortunately, the damage may have long been done to BABA stock, making its investment proposition speculative.
On TipRanks,
BABA stock has a 3 out of 10 Smart Score rating. This indicates moderate potential for the stock to underperform the broader market.
BABA Stock May Provide a Temporary Upside Window
Should Alibaba exceed expectations for Q2, the subsequent backdrop should yield a very positive outcome for BABA stock. Even if the company doesn’t quite hit targets but is in the neighborhood, BABA could still rise. So long as results from its Singles Day shopping event meet expectations, this might buoy sentiment for a brighter future.
However, astute investors might not want to stick around for Q3 results. At the very least, stakeholders should probably consider trimming excess exposure. Fundamentally, no one event will likely change the entire narrative of BABA stock. Whether that’s an outstanding earnings report or favorable government-related news, an embattled business like Alibaba’s probably needs multiple tailwinds to right the ship.
Worryingly, though, this is exactly where some circumstances could go awry for BABA stock. Not only might Alibaba not receive multiple tailwinds but the main one – robust Singles Day sales – may not materialize. It’s speculation, but still, Alibaba refused to provide numbers for last Friday’s shopping event.
At a time when both company and country suffer from severe headwinds, it’s only natural to believe that if good news exists, it would be disseminated from the top of every mountain. That this isn’t happening raises major concerns.
Also, stakeholders of BABA stock need to be cautious and realistic about COVID-19’s impact on China’s business ecosystem. For instance, global tech titans disclosed how the
nation’s lockdowns adversely affected operations. These lockdowns didn’t just materialize yesterday. Instead, they’ve long been a component of Beijing’s no-nonsense approach to eradicating COVID-19.
Therefore, the news that China only recently relaxed its COVID-19 rules should not be interpreted as necessarily an upside catalyst. Rather, it really means that eroding businesses will erode less quickly than before.
Besides, the Chinese government can always change its mind about relaxing its COVID measures. Thus, BABA stock is hardly out of the woods.
Is BABA Stock a Buy, According to Analysts?
Turning to Wall Street, BABA stock has a Strong Buy consensus rating based on nine Buys, zero Holds, and zero Sell ratings. The average BABA price target is $137.78, implying 73.8% upside potential.
The Quantitative Data Tells a Deceptive Tale
On paper, BABA stock might appear as a solid investment based on its quantitative data. For instance, the underlying company enjoys a cash-to-debt ratio of 3.05x, ranked better than nearly 80% of its competitors. Also, Alibaba features a three-year revenue growth rate of 32.1%, above 90% of its rivals. However, the information presented may be somewhat misleading.
True, Alibaba enjoys a solidly stable balance sheet. Certainly, with a strong cash position, those who attempt to short BABA stock will be incurring significant risks. Still, buying shares may not be so prudent.
For instance, while its longer-term revenue growth trajectory entices investors, it’s worth noting that in the previous quarter, Alibaba posted a 4.12% year-over-year loss in sales. Moreover, a
Bain & Co survey revealed that 34% of shoppers planned to spend less during Singles Day this year than last.
Therefore, moving forward, China’s consumer economy may be far less attractive than analysts believe. Logically, then, the aforementioned impressive growth rate could come down in a hurry, again drawing skepticism for BABA stock.
Disclosure
Wall Street's main indexes jumped on Tuesday as growing evidence of cooling inflation bolstered hopes of smaller rate hikes by the Federal Reserve, while Walmart's upbeat forecast powered gains in retail sector.
What happened
Chinese stocks continued to rally today after the Chinese government recently rolled out a large rescue plan for the country's struggling real estate industry. Another factor was President Joe Biden's meeting with China's President Xi Jinping.
The tech-heavy Nasdaq led Wall Street's main indexes higher on Tuesday as data providing further proof of cooling inflation boosted bets of smaller interest rate hikes by the Federal Reserve.
The NASDAQ 100 Pre-Market Indicator is up 325.33 to 12,026.27. The total Pre-Market volume is currently 41,426,365 shares traded.The following are the most active stocks for the pre-market session: ProShares UltraPro QQQ (TQQQ) is +1.03 at $23.10, with 8,204,345 shares traded. T
Chinese e-commerce giant Alibaba Group Holding Ltd. (
NYSE:BABA
) is set to release its second quarter Fiscal 2023 results on November 17, before the market opens.
The Street expects
BABA to post an adjusted profit of $1.68 per ADS in Q2, significantly lower compared to the year-ago quarter figure of $1.74 per ADS. Meanwhile, revenue is pegged at $29.34 billion, 5.8% lower than Q2FY21 revenue of $31.15 billion.
Factors Affecting Alibaba’s Performance
A slew of macroeconomic headwinds, including COVID-19-related lockdowns in China, intense competition, and sluggish growth, may have impacted Alibaba’s retail sales performance during the second quarter. At the same time, U.S. restrictions on chip exports to China stand to deteriorate Alibaba’s Cloud business.
Last month, the National Bureau of Statistics of China reported that the total retail sales of consumer goods (except automobiles) rose 1.2% year-over-year in September. Similarly, for the nine months ending September, the figure grew a modest 0.7%, indicating a slow but steady improvement in retail sales.
Additionally, the news that the figure for online retail sales of physical goods jumped 7.2% between January to October has pushed the shares of Chinese tech companies higher today. BABA stock is up 11.4% in pre-market trading on the news at the last check.
Moreover, an
improvement in the global website traffic visits at Alibaba shows that the tides may be turning favorable for the e-commerce giant.
Is Alibaba Stock a Buy, Sell, or Hold?
Despite the near-term challenges, analysts remain highly optimistic about Alibaba’s long-term potential. With nine unanimous Buys, BABA stock commands a Strong Buy consensus rating. Also, the average Alibaba price target of $137.78 implies an impressive 93.2% upside potential to current levels. Meanwhile, the stock has lost 40.8% so far this year.
Also,
Alibaba currently trades at a relatively low Price/Sales ratio of 1.83x, reflecting that the stock is favorably positioned for a high upside swing once the headwinds are behind.
Ending Thoughts
Alibaba is reeling from the macroeconomic headwinds and regulatory challenges that are impacting the majority of Chinese stocks. Nonetheless, Alibaba boasts a solid moat and stands to benefit the most once the headwinds are cleared. Analysts, too, are extremely bullish about the stock’s trajectory going forward. Furthermore, a recovery in online retail sales, the re-opening of the Chinese lockdowns, and related supply chain easing will lead to a full-throttle recovery for Alibaba’s business.
Disclosure
U.S. stock index futures rose on Tuesday after a meeting between President Joe Biden and Chinese leader Xi Jinping in which they pledged more frequent communications, while investors awaited producer prices data for cues on the path of future rate hikes.
China stocks closed higher for a third straight session on Tuesday on signs of easing geopolitical tensions after a meeting between U.S. President Joe Biden and Chinese leader Xi Jinping, while Beijing's latest supportive steps also lifted sentiment.
Alibaba (NYSE: BABA), which owns the largest e-commerce and cloud platforms in China, was once considered a solid growth stock. But over the past two years, its stock was crushed as the company dealt with: An antitrust probe, which resulted in a record $2.8 billion fine and tight
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