Alibaba (BABA) Q2 2023 results: what to expect

Hwhile the stock of Alibaba (BABA) has regained its popularity? After a brutal twelve months and a tough 2022, Alibaba stock suddenly caught fire, rising more than 10% in recent trading sessions. Shares have jumped about 25% since hitting a 52-week low of $58 on Oct. 24.

Can the strong continue? The Chinese e-commerce giant will release its second-quarter fiscal 2023 results before the opening bell on Thursday. The reason for the resurgence is due, in part, to the fact that the company reported that its e-commerce sales for the first 10 months of the current fiscal year increased 7.2%, a growth of more than 6, 2% recorded from January to September. period. Alibaba just wrapped up the Singles Day sales event, China’s equivalent of Black Friday.

Although the company did not release specific sales figures related to Singles Day, Alibaba noted that the volume was comparable to figures from the previous year, in which its gross merchandise volume reached 84.5. billion, up about 8% year over year. But although the market was enthusiastic, it should be noted that last year’s total was around 18 percentage points lower than 2020’s growth. This, however, highlights the decline in sentiment and market expectations. he company has lost more than two-thirds of its market capitalization since peaking in the latter part of 2020.

The company had to endure not only long periods of regulatory pressure, but also a disruption of its political standing in China and heavy operational demands imposed by the SAMR. The additional pressure impacted not only Alibaba’s revenue growth, but also its profit margins which fell eleven percentage points from 27% in 2020 to 16% at the end of 2021. was achieved and its Thursday’s quarterly results will offer good surprises.

In the three months to September, Wall Street expects the Hong Kong-based online retailer to earn $1.64 per share on revenue of $29.35 billion. That compares to the year-ago quarter where earnings were $1.75 per share on revenue of $31.43 billion. For the full year, ending April 2023, earnings are expected to decline 7.4% year-over-year to $7.22 per share, while revenue of $124.57 billion on the full year would decrease by 1.4% year-on-year.

Alibaba’s massive scale and e-commerce ecosystem were once seen as an asset, and now seem to be becoming a liability. Certainly, the company still has several sources of income that it can develop. However, increased regulatory scrutiny from the Chinese government has limited the growth tailwinds it can muster. As a result, the market continues to undercut the company’s revenue growth expectations as it navigates through these headwinds.

These headwinds were noticeable in the first quarter. Although the company reported revenue of $30.7 billion slightly above consensus of around $30 billion, it marked a 4% year-over-year decline. Adjusted EPS of $1.75 per share also topped the expected $1.58 per share. However, several of the company’s businesses, including the cloud segment, suffered from weaker demand. During the quarter, Alibaba’s China commerce segment fell 1% to $21.19 billion, which was slightly offset by a 10% rise in the company’s cloud segment which recorded business of $1.59 billion.

The company remains confident, saying it expects to generate strong operating cash flow. During the quarter, the company repurchased approximately $3.5 billion in stock. The company has about $12 billion in its share buyback program. However, for the stock to maintain its current uptrend, investors will want to see growth reaccelerate on Thursday. BABA is to provide higher and lower earnings, upside guidance and positive commentary on growth prospects for the remainder of fiscal 2023.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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