When Will Alibaba Release Q1 Results?
Alibaba is scheduled to release first-quarter results before the US markets open on Thursday, August 4. The Chinese company, which is dual-listed in the US and Hong Kong, will host a conference call in Hong Kong at 0730 ET or 1930 on the same day.
Alibaba Q1 earnings consensus
Wall Street forecasts that Alibaba will report a 1% year-on-year drop in revenue to RMB203,698 million and expects adjusted earnings per ADS to fall 38% to RMB10.22.
Alibaba Q1 earnings preview
Alibaba last quarter reported its slowest revenue growth on record, when it also suspended its guidance as China’s zero-tolerance approach to Covid-19 continues to weigh on the outlook. It will remain difficult this time around as analysts believe it will report the first drop in sales since it went public in 2014.
The decline in sales is driven by a 60% drop in sales in international e-commerce and a 3.8% drop in demand in digital media and entertainment. That’s only partially offset by weak 0.9% e-commerce sales growth from its core business in China, higher demand for its delivery services like Ele.me, and a 14% surge in cloud computing revenue. Analysts expect Alibaba to end June with 913.6 million annual active consumers, up over 10% year over year but a notable drop from the 1.31 billion at the end of March.
With that in mind, it’s worth recalling that only its core e-commerce unit in China and its much smaller but higher-margin cloud computing unit are generating profits sufficient to offset losses from its wide array of other operations.
And those gains are being squeezed as China’s economy grows slower, thanks in part to the country’s zero-tolerance approach to Covid-19, and costs continue to rise. Its adjusted Ebitda margin is expected to be just 17% in the first quarter, compared to 24% a year earlier.
While there is no guidance on how to proceed, investors are hoping for rosier comments on the outlook as Covid-19 restrictions eased in China. Analysts expect full-year revenue through March 2023 to rebound and grow about 7.7%, although adjusted earnings are expected to decline 17.8%, marking the second consecutive annual decline, as inflation continues to drive up costs.
Alibaba recently said it was being upgraded to a primary listing in Hong Kong amid the risk it could be forced to be delisted alongside hundreds of other Chinese stocks. Alibaba is among companies on a list of companies that fail US audit requirements, which could force them all to be booted from US stock exchanges.
The US requires all listed companies to be audited by regulators, but China has blocked access for foreign companies. Both countries have been negotiating in hopes of finding a solution, which now appears crucial if Alibaba and others remain listed in the US. The fact that there is now a shift as companies look to shore up listings elsewhere, mainly in Hong Kong, should come as no surprise. It’s important to remember that they don’t want to give up their presence in the US, but the unwelcome environment compels them to act. Alibaba has said it is committed to maintaining its New York and Hong Kong listings.
This is creating greater political and regulatory turmoil for Chinese companies, whose valuations have been wiped by hundreds of billions in recent years thanks to a government crackdown as China seeks a better grip on the power of the country’s largest and most influential tech companies. Although there were hopes that the government would end the crackdown earlier this year, the threat of further action remains.
In light of this, the latest blow could be one of the biggest yet, after The Wall Street Journal reported that Alibaba’s founder Jack Ma – who has disappeared from public view since he resigned as chair of Alibaba in 2019 after a clash with regulators – will relinquish control of the Ant Group. Ant Group is the financial services giant that was set to complete a blockbuster IPO in 2020 – which would have been the world’s largest listing ever – before being stymied by Chinese regulators, who have since forced it to restructure and review its listing plans .
Ma is believed to directly own about 10% of Ant Group, but has ultimate control with over 50% stakes through other companies, and some of his voting rights could be vested in other directors, including CEO Eric Jing, the WSJ said . Ant Group’s restructuring could allow it to finally achieve its IPO ambitions, but there are fears a change in voting rights could affect Alibaba’s influence over the company, in which it owns around 33%. holds, could weaken. We’ve already seen evidence that Alibaba and Ant Group are decoupling to allay regulators’ concerns, but Alibaba’s stake in the company is still a huge asset for investors to keep an eye on given the political pressure.
Where Next for BABA Stocks?
Alibaba stock has been in consolidation mode since falling to its lowest level in over six years in March, narrowing the range between a bottom of $81 and a high of $123. The stock briefly surpassed these levels over the past four months, but has bounced back quickly.
This leaves room for this week’s update to provide a new catalyst that may facilitate a breakout of this range. The stock has lost ground after coming under renewed pressure over the past month, and the fact that trading volume has increased during the final leg of the downtrend suggests this could be gaining traction. The $81 bottom should remain firm considering the RSI has slipped into oversold territory down here, but if it fails, the six-year low of $73.30 will come back into play. Any dip below this will open the door to levels not seen since 2016.
On the plus side, the stock needs to break the $123 ceiling that has capped the stock since March, and it needs to regain the 50-day and 100-day moving averages in the meantime. The next target behind is $129. The 47 brokers covering Alibaba believe the sell-off has been grossly overstated with an average price target of $159, showing they believe there is over 80% upside potential over the next 12 months.
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