Chinese e-commerce giant Alibaba (BABA) is set to announce its fiscal Q2 FY25 results on November 15. Wall Street analysts expect the company to report earnings of $2.05 per share for Q2, down 5% from the year-ago quarter. On the contrary, analysts expect revenues to increase 6% year-over-year to $33.16 billion, according to data from the TipRanks Forecast page.
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It’s important to highlight that Alibaba’s recent earnings history has not been so impressive, with the company missing earnings estimates in two of the past five quarters.
Factors to Consider Ahead of Q2
According to TipRanks’ Bulls Say, Bears Say tool, analysts forecast that Alibaba will face earnings pressure due to the challenges in the current economic landscape. Bears remain concerned about the weakening consumer demand in China amid persistent deflationary trends. They also note that Alibaba’s ongoing reinvestments could further weigh on earnings, potentially impacting adjusted EBITDA.
On the positive side, bulls see potential in Alibaba’s accelerating cloud segment, fueled by public cloud adoption and rising AI service demand. Further, they expect Alibaba’s international digital commerce and Cainiao logistics revenues to grow, reflecting its robust cross-border expansion. Bulls also remain optimistic about Alibaba’s share buyback and dividend strategies, which could enhance shareholder returns.
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.
Although earnings are expected to decline, analysts project Alibaba’s revenue to show year-over-year growth. TipRanks’ Website Traffic Screener supports this, showing a 15.61% year-over-year rise in visits to alibaba.com and its two other websites (aliexpress.com and taobao.com) for Q2, suggesting stronger top-line performance for the quarter.
Options Traders Anticipate a 6.15% 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 6.15% move in either direction.
Is Alibaba Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on 15 Buys and three Holds assigned in the past three months, as indicated by the graphic below. The average BABA stock price target is $124.40, implying upside potential of 35.54%. Alibaba stock increased 15.5% over the past year and 21% year-to-date.
