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Alibaba Q2 Earnings: BABA Stock Faces Tough Road Ahead as Earnings Near

By:Thomas Westwater

Alibaba set to report second-quarter earnings on Nov. 16. $2.48 earnings per share on $30.7 billion revenue expected. Can it beat expectations?

  • Alibaba is set to report second-quarter earnings on Nov. 16.
  • Analysts expect $2.48 earnings per share on $30.7 billion revenue.
  • The technical structure remains bearish, despite a potential bottom.

Alibaba Group Holding (BABA)—the Chinese e-commerce giant—is set to report fiscal second-quarter results before market open on Thursday. Traders are keen to see the numbers as the Chinese economy struggles. Growing economic headwinds have prompted officials in Beijing to take measures to boost economic growth.

Earnings reports from Alibaba on Thursday, along with those from Walmart (WMT) and Macy’s (M), will provide insight into consumer spending habits ahead of the U.S. holiday season. Will the slate of earnings releases help to assuage growing concerns about consumer spending in the world’s two largest economies?

What do traders expect from BABA?

Alibaba has been working hard to lure shoppers back from its main rivals. Those efforts include offering incentives to customers of its Taobao and Tmall platforms. That is expected to translate into a slowdown in adjusted EBITA growth (earnings before interest, taxes, and amortization), which analysts expect to fall to $5.7 billion from the prior quarter’s $6.5 billion. That would represent a 7.8% year-over-year growth rate, down from 24.3% last quarter.

According to Bloomberg data, the September-ending quarter is expected to produce $30.74 billion in revenue and adjusted earnings per share (EPS) of $2.15. Those figures would be down from $33.37 billion in revenue and $2.48 EPS from last quarter and represent a 1.63% and 13.88% year-over-year growth rate, respectively.

How will traders react?

BABA stock hasn’t performed well recently. The stock has lost ground for the past three months, although November is on track for a small gain of nearly 2% as of Tuesday. Meanwhile, the S&P 500 (/ES) is up over 7%.

On the other hand, China’s equity benchmark, the CSI 300, is up only 0.27% month-to-date. That said, Chinese equities are fighting an uphill battle amid depressed sentiment for the country and region. Given that BABA is looking at a likely slower growth trajectory, investors are fighting an uphill battle for now.

BABA technical outlook

Since July, BABA has made a series of lower lows and lower highs, but there is a chance the stock bottomed in late October with a higher low forming. However, prices remain below the 50-day simple moving average (SMA). For now, the technical structure remains bearish. Bulls would want to see a clean break, meaning at least a daily close, above the 50-day SMA.


Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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