Alibaba Earnings Preview: Slowing E-commerce Growth and Potential Profit Decline

Mitrade
Updated
coverImg
Source: DepositPhotos

Insights — On November 15, Alibaba (BABA) will report its fiscal Q2 2025 earnings for the period ending September 30, 2024.


The market expects Alibaba to post quarterly revenue of $34.11 billion (approximately RMB 245 billion), representing a year-over-year increase of 10.8%. Non-GAAP EPS are projected to be $2.11, down 1.4% year-over-year.


17315531536087


Year-to-date, Alibaba's stock has risen 23%, peaking at $117.8 in October before pulling back. Investors are keen to see if this earnings report can trigger a stock rebound.


Earnings Focus: Core E-commerce, Cloud Business, and Outlook


Last quarter, Alibaba's core business saw steady growth, with Taotian Group reporting increases in both gross merchandise volume (GMV) and order numbers, while its cloud business returned to growth.


Morgan Stanley forecasts Alibaba’s GMV to grow 4-5% year-over-year this quarter, lagging behind its peers, with customer management revenue (CMR) expected to grow 2-3%.


Breaking down by segment, Taotian Group is expected to post revenue of RMB 98.685 billion (compared to RMB 113.373 billion last quarter), reflecting a year-over-year increase of 1.1%. Meanwhile, Alibaba's Cloud Intelligence Group is projected to report revenue of RMB 29.86 billion (compared to RMB 26.549 billion last quarter), up 8% year-over-year. 


Jefferies expects Alibaba's year-over-year GMV growth to narrow this fiscal quarter, with the same anticipated for CMR. Additionally, Alibaba's International Digital Commerce Group is expected to improve in efficiency, while strong AI demand will likely benefit its cloud business. Jefferies maintains a "Buy" rating on Alibaba, with a price target of $142.


Analysts point out that, in addition to monitoring core e-commerce and cloud business performance, investors should pay attention to Alibaba’s forward guidance and updates on its share buyback program.


What’s Next for Alibaba Stock?


According to TipRanks data, in the past 12 quarters, Alibaba's stock has a 58% chance of declining on earnings release day.

Source: TipRanks; Alibaba Stock Price Performance on Earnings Day


Alibaba reported strong GMV growth during the "Singles’ Day" shopping festival. However, they anticipate that core adjusted EBITDA for Q3 will be under pressure, with a 5% year-over-year decline.


While Alibaba faces challenges ahead, its outlook remains positive. According to TipRanks, 18 Wall Street analysts have set an average price target of $124.40 for Alibaba, indicating a potential 35.5% upside from its current share price.



* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
BitMine In, Robinhood Out: What’s Driving Cathie Wood’s Latest Bets at ARK Invest?According to newly released filings from Ark Invest, it bought millions of dollars’ worth of shares in BitMine Immersion on Monday.
Author  TradingKey
Yesterday 08: 15
According to newly released filings from Ark Invest, it bought millions of dollars’ worth of shares in BitMine Immersion on Monday.
placeholder
Asia-Pacific stocks rose and the U.S. dollar weakenedAsia-Pacific shares pushed higher on Tuesday on hopes the U.S. Federal Reserve will cut interest rates as soon as next week.
Author  Cryptopolitan
Yesterday 05: 50
Asia-Pacific shares pushed higher on Tuesday on hopes the U.S. Federal Reserve will cut interest rates as soon as next week.
placeholder
Boeing has become the centerpiece of Trump’s trade approach.Boeing has become the unexpected centerpiece of Donald Trump’s entire global trade approach.
Author  Cryptopolitan
Yesterday 05: 48
Boeing has become the unexpected centerpiece of Donald Trump’s entire global trade approach.
placeholder
China doubles down on practical AI as America spends billions and burns energyAmerica is throwing billions of dollars and burning through massive energy reserves in an arms race to dominate AI before China gets there first.
Author  Cryptopolitan
Sep 04, Thu
America is throwing billions of dollars and burning through massive energy reserves in an arms race to dominate AI before China gets there first.
placeholder
Dow Jones futures remain steady ahead of key US economic dataDow Jones futures remain steady near 45,300 during European hours on Thursday, ahead of the opening of the United States (US) regular markets.
Author  FXStreet
Sep 04, Thu
Dow Jones futures remain steady near 45,300 during European hours on Thursday, ahead of the opening of the United States (US) regular markets.
Real-time Quote