{"id":46684,"date":"2023-08-10T06:25:27","date_gmt":"2023-08-10T10:25:27","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/alibaba-stock-jumps-as-earnings-smash-estimates-but-theres-a-case-for-caution\/"},"modified":"2023-08-10T06:25:29","modified_gmt":"2023-08-10T10:25:29","slug":"alibaba-stock-jumps-as-earnings-smash-estimates-but-theres-a-case-for-caution","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=46684","title":{"rendered":"Alibaba Stock Jumps as Earnings Smash Estimates. But There’s a Case for Caution."},"content":{"rendered":"
\n
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\n Alibaba
\n stock jumped on Thursday after the Chinese e-commerce giant reported June quarter earnings and revenue well ahead of Wall Street\u2019s expectations. <\/p>\n

But the results don\u2019t give away much on its outlook as China\u2019s economy slows down and consumption weakens, which would be expected to hit Alibaba\u2019s core business.<\/p>\n

\n

Alibaba (ticker: BABA) reported earnings per share of 17.37 Chinese yuan ($2.40) on revenue of CNY 234.2 billion ($32.3 billion). The results outpaced expectations of analysts surveyed by FactSet, who had estimated earnings at CNY 14.59 on revenue of CNY 224.7 billion.<\/p>\n

Shares in Alibaba advanced 3.2% in premarket trading.<\/p>\n

This is breaking news. Read a preview of Alibaba\u2019s earnings below and check back for more analysis soon.<\/em><\/p>\n

A spate of grim economic data out of China has sent stocks like Alibaba into a slump. While earnings from the tech giant, due Thursday, could appear to be a rare bright spot, they likely won\u2019t spell out the bad news\u2014and what investors may be overestimating.<\/p>\n

Analysts surveyed by FactSet expect
\n Alibaba
\n (ticker: BABA) to report per-share profit of $2.02 for the three months to the end of June, which is the company\u2019s first fiscal quarter, on revenue of $31.2 billion. If the numbers come in at the money, it would be the e-commerce and cloud computing giant\u2019s best quarter in about two years on both metrics, excluding December quarters that deliver explosive holiday shopping activity.<\/p>\n

Yet there may be little reason to celebrate. Signs point to a significant slowdown in China, the world\u2019s second-largest economy, including recent trade data revealing a dramatic fall in imports, which bodes ill for consumption-sensitive Alibaba. Shares in the company are down almost 8% this month.<\/p>\n

Alibaba faces a tough outlook, but investors may not know it just by looking at the results. The company doesn\u2019t tend to outline financial guidance in its earnings release, and is similarly light on details in its earnings call. While data out of China has been gloomy for a while, the latest bad batch has been for the July period, while Alibaba will only report financials through the end of June.<\/p>\n

And it\u2019s possible investors may be overestimating the path ahead. Wall Street analysts see Alibaba posting higher revenue again in the September quarter, at $31.3 billion. They then see a a blowout December quarter with $37.2 billion in estimated revenue, which would be one of its best three-month periods on record. If the economic picture is as troubling for China as it appears\u2014spelling weak consumption\u2014can Alibaba really be expected to deliver?<\/p>\n

Of course, there\u2019s an important counter-argument to raise: that China\u2019s economic recovery, while disappointing, isn\u2019t as bad as it looks.<\/p>\n

There are also other things beyond macro trends to watch out for in Alibaba earnings. The behemoth announced plans in March to split itself up, transforming from a tech conglomerate to a holding company, and its last quarterly report in late May proved to be an opportunity for an update. Any news from its cloud computing arm will also be of interest. The unit has made efforts to capitalize on the AI boom and is poised to be spun off.<\/p>\n

But investors would do well to read between the lines of any language from executives about current trading conditions. Alibaba and its stock still lives and dies on the back of its core e-commerce business, which is closely tied to the health of China\u2019s economy.<\/p>\n

Write to Jack Denton at jack.denton@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Alibaba stock jumped on Thursday after the Chinese e-commerce giant reported June quarter earnings and revenue well ahead of Wall Street\u2019s expectations. But the results don\u2019t give away much on its outlook as China\u2019s economy slows down and consumption weakens, which would be expected to hit Alibaba\u2019s core business. Alibaba (ticker: BABA) reported earnings per […]<\/p>\n","protected":false},"author":1,"featured_media":46685,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-46684","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nAlibaba Stock Jumps as Earnings Smash Estimates. 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