Alibaba Earnings: Will Tides Turn?
Alibaba (BABA) stock hasn't been a great investment this year. Shares of this e-commerce company have lost about 29% of its value on a year-to-date basis. Further, it is down over 39% over the past 12 months due to China’s crackdown on tech companies and heightened regulatory scrutiny.
Another interesting piece of data that is worth looking at is its website traffic trends that provide a glimpse of future performance. Alibaba’s total website visit volumes (including alibaba.com and aliexpress.com) fell from 1.7 billion in Q3 FY20 to 1.3 billion at the end of Q1 FY21.
While Alibaba underperformed the Nasdaq composite index by a significant margin this year, will its Q2 FY22 earnings bring some respite for its investors?
Street Projections
Alibaba will announce its Q2 earnings on November 18. Wall Street expects Alibaba to post revenues of $32.06 billion, up about 40% year-over-year. However, its adjusted earnings are expected to decline by 26% year-over-year to $1.95 a share.
Commenting on Alibaba’s upcoming quarterly results, Scott Devitt of Stifel Nicolaus stated he is lowering the Q2 top-line growth estimate to “+32.5% y/y (from +37.1% y/y).” Devitt added that the reduction reflects a moderation in growth in discretionary categories, per NBS (National Bureau of Statistics) data.
On the brighter side, Devitt expects regulatory pressure on Alibaba could reduce a bit as it integrates WeChat Pay to its main e-commerce platforms.
Besides Devitt, Vincent Yu of Needham also lowered his Q2 estimates for Alibaba. In October, Yu stated that the resurgence of the coronavirus and Zhengzhou floods led to a slowdown in overall retail growth (including online retail sales).
He added that Alibaba’s strategic investments would likely weigh on its margins, in turn, its Q2 earnings.
Wall Street's Take
While Alibaba stock disappointed this year, Wall Street maintains a bullish outlook owing to its low valuation. On TipRanks, Alibaba has received 19 Buys and one Hold for a Strong Buy consensus rating. Moreover, Alibaba scores an 8 out of 10 from TipRanks’ Smart Score rating system, implying it will likely outperform the market.
The average Alibaba price target of $239.84 implies 47.9% upside potential to current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.
