Can Alibaba Stop Its Slide With Earnings?

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Alibaba Group Holding Limited (NYSE: BABA) is scheduled to report its fiscal first-quarter financial results Wednesday before the markets open. Thomson Reuters has consensus estimates that call for $0.58 in earnings per American depositary share (ADS) on $3.39 billion in revenue. The same period from the previous year had $2.54 billion in revenue. One ADS is equal to one ordinary share.

In the previous quarter, the number of active buyers on Alibaba’s retail marketplaces totaled 350 million at the end of March, up 37% year-over-year. Mobile active users rose 9% from 265 million at the end of December to 289 million at the end of March. Mobile revenue from the China commerce retail business rose 352% to $846 million, or 40% of the company’s total China commerce retail business.

Quarterly gross merchandise value (GMV) rose 40% to $97 billion year-over-year but fell 24% sequentially in the fiscal fourth quarter. GMV is the total value of sales transacted on Alibaba’s websites. At the same time, Mobile GMV rose 157% year-over-year to $49 billion and slipped 7% sequentially.

These sequential slides did not have a positive effect on Alibaba as a whole. During this current quarter the company has performed weakly and even now shares are hovering right around their post-IPO low. Over the course of the first quarter shares fell 7.2% and shares have fallen 22.6% year to date.

This will also be the first quarter that Alibaba’s new CEO will be in power. Daniel Zhang, who was previously the COO, replaced Jonathan Lu at the CEO position just following the fiscal fourth quarter earnings. This quarter will be a chance for Zhang to prove himself and turn Alibaba around, however it could take more time than just a single quarter.

A few analysts weighed in on Alibaba prior to the earnings release:

  • Sanford Bernstein initiated coverage with a Buy rating.
  • Cantor Fitzgerald reiterated a Buy rating with a $110 price target.
  • Summit Research reiterated a Buy rating with a $97 price target.

Alibaba’s ADSs were down 4.6% at $76.81 on Tuesday afternoon after posting a new 52-week low of $76.15. The stock has a consensus analyst price target of $106.19 and a 52-week high is $120.00.

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