Alibaba Analyst Cautious Ahead Of Chinese E-commerce Giant’s Q2 Results: Retail Remains Optimistic

Chinese e-commerce giant Alibaba Group Holding Ltd. ($BABA) is scheduled to report its second quarter results before the market opens on Friday.

The Jack Ma-founded company is expected to report a decline in its September quarter earnings per ADS from $2.20 in 2023 to $2.05 in 2024. 

Analysts, on average, expect revenue of $33.11 billion, about 5% higher than the year-ago’s $31.55 billion. In the June quarter, revenue was up 4%. 

Smaller peer JD.com, Inc. ($JD) reported Thursday earnings and revenue growth for the September quarter but top-line growth trailed estimates of some analysts, sending the stock lower by 6.56%.

Hangzhou, China-based Alibaba derived roughly 47% of June quarter revenue from its e-commerce business, and about 11% from its cloud computing business. The remainder came from its Cainiao logistics business, local services group, digital media entertainment and others. 

Alibaba’s fundamentals are sensitive to consumer sentiment and spending, given its heavy reliance on its e-commerce business.

The company disclosed on Tuesday that gross merchandise volume for its Taobao and Tmall saw robust growth at the Nov. 11 Singles’ Day festival, with active buyers climbing to a record. 

Bo Liu, Vice President of Alibaba Group, said, "Consumer participation in this year’s 11.11 reached a historic high, underscoring the impact of our ongoing efforts to enhance the consumer experience and setting the industry benchmark for business operating environment for merchants."

Earlier this week, Mizuho Securities analyst James Lee upped the price target for Alibaba shares from $92 to $113, while maintaining an “Outperform” rating, the Fly reported. The analyst is positive about the stimulus policies announced by the Chinese government and central bank.

That said, the analyst sounded out caution regarding soft Asia Internet fundamentals and the uncertainty in the wake of potential higher tariffs.  He also sought evidence of improvement in structural issues such as unemployment and real estate. 

Alibaba shares ended Thursday’s session down 1.54% at $90.58 and it has advanced 19.40% for the year-to-date period.

The retail crowd on the Stocktwits platform are generally bullish about the stock. One user expected the stock to break above $100 in the aftermath of earnings.

Another pointed to the positive retail sales data for October released by China’s National Bureau of Statistics on Friday. The user saw it as a positive for Alibaba.

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