Alibaba Group’s latest earnings report was released on November 17th, 2022, before the market opened.
Alibaba Group Holding is a Chinese multinational e-commerce giant that also manages businesses ranging from retail, logistics, and food delivery to technology and cloud computing. The conglomerate is composed of three major domains: Taobao, Alibaba.com, and Tmall, and they cover over 50% of all online retail sales in China.
Some prominent factors that are likely to have affected the quarterly results
Several factors might have adversely impacted Alibaba’s quarterly results, where China’s COVID situation is one of the leading constituents. As per some reports, Chinese authorities are purportedly tightening the pandemic restrictions and imposing new lockdowns under the zero-COVID case policy.
Moreover, in the face of some domestic political issues, there are hovering fears of Chinese stocks being delisted from US stock exchanges as the government gets ready to crack down on big tech firms like Alibaba. Further, the broader geo-political tensions under the backdrop of the Russia-Ukraine war might also have affected the company’s earning power.
BABA stock may witness a short-lived boost if China pulls back from its COVID-Zero policy. However, the company won’t necessarily see many positive effects of enhanced travel demand and spending from foreigners. In the presence of such unstable market conditions, many traders have turned towards CFD platforms like easymarkets to balance their portfolios.
Quarterly earnings show weaker revenue results
For the latest quarterly report, Zacks Consensus expected Alibaba to register earnings of $1.67 per share, indicating a change of -2.6% from a year ago and a y-o-y decline of 4.02%. However, Alibaba reported earnings of $1.82 per US share. Furthermore, revenue was estimated at $29.6 billion, and the company just missed expectations by delivering revenue of $29.12 billion.
From a year-over-year perspective, BABA’s earnings and sales increased by 15% and 3%, respectively.
There are also some optimistic sentiments regarding the latest earnings results in the investors’ community. It is because in its previous quarterly report, the company revealed that it “made meaningful progress” in “narrowing operating losses” for many of its fast-growing businesses. Also, at the recent quarterly results call, Alibaba highlighted “prioritizing the cost structure optimization and cost control” in the period ahead.
Alibaba posted better-than-expected results
Alibaba’s previous quarter revenue of $30.69 billion had beaten the expectations on the top as well as bottom lines and signaled an overall improvement in the business climate.
The China-based corporation reported earnings of $1.75 per American Depositary Share which were well above the analysts’ estimate of $1.58 a share on revenue of $30.1 billion, as per the FactSet data. The EPS surprise came out to be +16.67%.
Over the previous four quarters, Alibaba Holding Ltd has exceeded consensus EPS forecasts 3 times while it has surpassed revenue estimates just once over this span. Alibaba’s stock price jumped 7.86% on the release of the earnings report to reach $84.26 per share.