Alibaba Group (BABA.US), Chinese e-commerce giant, is scheduled to publish its fiscal-Q3 2024 (calendar Q4 2023) earnings ahead of the Wall Street cash session open tomorrow (February 7, 2024). US-listed shares of the company are trading around 4% higher today, supported by media reports on a meeting between Chinese President Xi and Chinese financial regulators. Earnings could be the next big mover for the stock. Let's take a quick look at analysts' expectations!
Fiscal-Q3 2024 expectations
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Open real account TRY DEMO Download mobile app Download mobile app- Revenue: 261.25 billion CNY (+5.5% YoY)
- Taobao & Tmall Group: 133.3 billion CNY (+4.9% YoY)
- Alibaba International Digital Commerce Group: 27.2 billion CNY (+39.7% YoY)
- Local Services Group: 15.2 billion CNY (+13.5% YoY)
- Cainiao Smart Logistics Network Limited: 25.78 billion CNY (+55.7% YoY)
- Cloud Intelligence Group: 25.98 billion CNY (+28.7% YoY)
- Digital Media & Entertainment Group: 5.8 billion CNY (+36.3% YoY)
- All Others: 47.14 billion CNY (-5.9% YoY)
- Gross Profit: 102.71 billion CNY (+5.1% YoY)
- Gross Margin: 39.3% vs 39.5% a year ago
- EBITDA: 50.4 billion CNY (+5.7% YoY)
- Operating Income: 43.14 billion CNY (+23.2% YoY)
- Operating Margin: 16.1% vs 14.1% a year ago
- Net Income: 35.23 billion CNY (-23% YoY)
- Net Margin: 14.2% vs 18.5% a year ago
- EPS: 14.28 CNY vs 18.00 CNY a year ago
Alibaba Group is expected to report sales and operating profit growth for the quarter ended on December 30, 2023. Company is expected to report strong performance of its Taobao & Tmall as well as Cainiao Smart Logistics Network units, which will help offset an expected profitability drop in the international e-commerce unit. However, domestic e-commerce is expected to have remained strong. Focus will also be on the performance of cloud unit, as well as recently touted new AI tools, with Alibaba emerging as a key AI provider in China. Rollout of AI tools is likely to support company's cloud business.
Alibaba's stock reactions to the past 20 earnings releases were mostly negative. Importantly, stock often dropped even after reporting double beat! Source: Bloomberg Finance LP, XTB Research
The average absolute post-earnings price move for the stock is 4.50-4.60%, based on past 20 Alibaba's earnings releases. However, current options market pricing suggests that stock may be more volatile than usual and implies a 5.80% post-earnings price move.
Taking a look at Alibaba chart (BABA.US) at D1 interval, we can see that the stock has managed to break above the short-term downward trendline recently and is approaching the $79.00 resistance zone marked with previous local highs and lows. A strong earnings report, especially if it also provides some upbeat outlook on company's AI prospects, could provide fuel for a break above the $79 zone. However, as one can see on the chart below, Alibaba's stock moves in tandem with board Chinese stock market (CHN.cash, light blue overlay). This means that even if company surprises with earnings, impact on the share price may be short-lived unless the macro outlook for China improves.
Source: xStation5
