Chinese e-commerce giant Alibaba (BABA) is set to announce its fiscal Q1 FY25 results on August 15. Wall Street analysts expect the company to report earnings of $2.09 per share for Q2, down from $2.42 in the year-ago quarter. Meanwhile, analysts expect revenues of $34.59 billion, up 3.7% year-over-year.
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In terms of share price growth, Alibaba stock decreased 10.4% over the past year but increased 7% year-to-date. It’s interesting to note that the company has missed earnings estimates for the past two consecutive quarters.
Factors to Consider Ahead of Q1
Alibaba is expected to report another weak earnings quarter due to China’s sluggish economic growth, increased competition from new e-commerce players like PDD Holdings (PDD), and a slowdown in its cloud computing sector. According to TipRanks’ Bulls Say, Bears Say tool, bears are worried about Alibaba’s profit figures and uncertain near-term prospects in its core e-commerce segment.
Meanwhile, bulls are optimistic about Alibaba, noting that new monetization products should boost cloud revenue growth. They emphasize that improving user experience and GMV growth are crucial for expanding market share. Additionally, dividends and share buybacks demonstrate the company’s confidence in its performance.
Website Traffic Trend Eases Worry
Investors can use TipRanks’ Website Traffic Tool to gain insights into a company’s upcoming earnings report. The tool offers information on how a company’s website domain performed over a specific time frame.
Despite forecasts of a decline in earnings, analysts anticipate an increase in top-line numbers compared to the previous year. TipRanks’ Website Traffic screener supports this, showing a 38.98% year-over-year and 6.04% sequential rise in visits to alibaba.com and its two other websites (aliexpress.com and taobao.com) for fiscal Q1, suggesting stronger top-line performance for Q2.
Options Traders Anticipate a Minor Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 5.99% move in either direction.
Is Alibaba a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on 13 Buys and three Holds assigned in the past three months, as indicated by the graphic below. Meanwhile, the average price BABA target of $104.56 per share implies a 29.23% upside potential.
