Alibaba Q4 earnings: will Chinese tech giant’s share price keep falling further?
Despite the considerable challenges that many US tech companies continue to face, China's online conglomerate certainly has a longer list of "troubles", and most of them are not “temporary”.
When to expect the earnings report?
Alibaba Group Holding Limited is estimated to reports earnings on 1 February for the fiscal fourth quarter Q4 ended in December, 2021.
What to expect?
According to Zacks Investment Research, based on 3 analysts' forecasts, the consensus EPS forecast for the quarter is $2.05. The reported EPS for the same quarter last year was $2.98.
Alibaba share price review
The Chinese tech behemoth has been on a roller coaster all through the course of 2021 after the Chinese government began a series of industry-wide clampdowns since April 2021. Since then, the price of BABA has been skydiving from $225 to close at $118 on Dec 31st, nearing a 50% loss. While during the same time, S&P 500’s yearly return last year was 37%, Nasdaq gained 21.4%.
A big miss in Q3 earnings and the delisting of DiDi was another two key events to stumble online retailer giant recently. Alibaba experienced one of its worst days following the Q3 earnings in November with a jaw-dropping 11% intraday drop. The company’s long-term profitability became the most significant concern for its shareholders as its most profitable sector’s (commerce) margin decreased from 35% in the quarter ending 30 September 2020 to 19% a year later.
Too cheap to be ignored?
BABA's current valuation is only about 16x PE with a 20% growth rate, thus the PEG ratio is less than 1. In other words, the current price for BABA is already on the "Boxing day sale".
Charlie Munger, 50-years partner of Warren Buffet, doubled his stake in Alibaba first in 2021 Q3 and doubled it again in Q4. The move seemingly serves as a great example of the half-century investment legend's famous quote: "when a great company gets into temporary trouble, we want to buy them when they're on the operating table."
However, if investors are looking to follow Mr Munger's path, the keyword is "temporary trouble". Despite the considerable challenges (i.e., inflation, supply chain, and tightening monetary policy) that many US tech companies continue to face, China's online conglomerate certainly has a longer list of "troubles". Chinese government's fast-changing policy, the slowing down of the Chinese economy, and the trade battle between the US and China may see Alibaba follow its peer DiDi's delisting path…. None of them is safe to be called a "temporary".
Technical Analysis
Based on the daily chart, BABA’s share price has been skewing into the downside trajectory formed since early 2021.
Current support can be found at $111, the level back to September 2016. A broken of this level will send the price to test as low as $88. On the other hand, the 20 days moving average at around $124 will be the crucial resistance for the price to fight for if BABA looks to re-challenge the high this year at $131. RSI indicator, from the weekly chart, shows the descending of the highs, is supporting a mid-term bear view.
Daily chart
Weekly chart
Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Act on stock opportunities today
Go long or short on thousands of international stocks with CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
