Alibaba earnings preview: navigating a complex landscape

Alibaba Group Holding Ltd (All Sessions) , a leading Chinese multinational specializing in e-commerce, cloud computing, digital media, and financial technology, is scheduled to release its quarterly earnings report on Friday, November 15, 2024, before the U.S. markets open.

Widely regarded as a bellwether for China’s consumer economy, Alibaba operates an extensive ecosystem encompassing online retail platforms such as Taobao and Tmall, a world-leading logistics network under Cainiao,and cutting-edge technology services via Alibaba Cloud, a global leader in cloud computing and AI innovation.

Alibaba earnings: key data and expectations

Alibaba Group Holding Ltd (All Sessions) is set to release its quarterly earnings report on Friday, November 15, 2024, before the U.S. markets open.

Analysts expect the company to report earnings per share (EPS) of CNY 14.77, representing a 3% year-over-year decline.

Revenue is forecasted at approximately CNY 240.04 billion, marking a 6% increase from the same quarter last year.

Alibaba earnings key watches

• Subdued growth

In the recent quarter, Alibaba Group Holding Ltd (All Sessions) , in its first financial quarter of 2025, reported total revenues of $33.5 billion, reflecting a 4% year-over-year increase. However, its core Taobao and Tmall Group showed weakness, with a 1% YoY decline compared to 4% growth in the previous quarter.

Growth in the International Digital Commerce Group, Alibaba’s second-largest segment, also slowed, decelerating from 45% in the March quarter to 32% in the June quarter.

A bright spot for the company was Alibaba Cloud, which grew by 6%, driven by double-digit cloud growth and increased adoption of AI-related products.

Overall, the Chinese e-commerce giant appears to be managing a cautious domestic consumer market, while its cloud services segment continues to deliver steady growth.

• Outlook and potential catalysts

Alibaba's outlook remains closely aligned with the trajectory of the Chinese economy and evolving regulatory policies. The upcoming earnings report will provide a critical opportunity for investors to evaluate the economy's growth momentum, particularly following Beijing's recent stimulus measures introduced since late September.

Beyond macroeconomic headwinds, Alibaba Group Holding Ltd (All Sessions) also faces significant industry challenges, including intensifying competition, escalating operational and capital expenditures, and ongoing geopolitical uncertainties. These factors could continue weigh on the company’s profitability and growth trajectory.

During the earnings call, investors will get a glimpse of Alibaba management's strategic initiatives and forward guidance, offering clarity on how the company plans to navigate these complex challenges.

Alibaba share prices and rating

Alibaba Group Holding Ltd (All Sessions) stock performance on the New York Stock Exchange has been lackluster in recent years. After peaking above $280 around four years ago, its share price has more than halved and has been hovering around $100 since 2022.

Thanks to Beijing’s "stimulus bazooka" announced in late September, BABA’s share price reached its highest level since January 2023 but has since given up some of those gains. At the time of writing, Alibaba’s share is trading below $100 again.

Looking ahead, the stock has garnered strong analyst support over the past three months, with 51 out of 61 global analysts rating it as a buy (including strong buy), while the remaining 10 analysts have a hold recommendation. The one-year price target, based on the estimates of 51 analysts, is $118.79, representing a 29% potential upside from the closing price on November 12th,2024.

From a technical perspective, the brief bounce since late September has clearly given way to further downside, as concerns over the Chinese economy persist.

The stock is currently testing the price gap created at the start of the recent rally (between $90.01 and $94.55), which may offer some near-term support. However, a breach below this gap could open the floor for further downside, potentially targeting $81.85, where the 200-day SMA is currently positioned.

On the flip side, buyers will need a close above $96.77 to gain confidence that a recovery attempt is underway.

Conclusion

Alibaba's upcoming earnings report is a key event for investors. Despite a challenging operating environment, the company's solid fundamentals and growth potential remain compelling. Key areas to focus on include its core segment revenue growth, cloud services momentum, and future guidance to gauge its long-term outlook.