BABA beats solidly on the upper and lower lines
- Alibaba beats EPS estimates on 2023 FQ, revenue down year on year for the first time in company history.
- The SEC placed BABA on the list of companies threatened with debarment.
- BABA shares jump nearly 5% on positive news.
UPDATE: Alibaba made profits that impressed its beleaguered investors Thursday morning. Earnings for the first quarter of fiscal 2023 (quarter ending June 2022) beat consensus at $1.75 earnings per average diluted share (EPADS) on revenue of $30.69 billion. BABA stock jumped 4.7% to $100.20 in premarket. Revenue exceeded expectations by $530 million and topped the EPADS consensus by 19 cents. Still, revenue was down about $1.1 billion year-over-year, the first time it’s happened in its life as a public company.
Alibaba Stock (BABA) is up more than 2% in Thursday’s premarket ahead of fiscal first quarter 2023 results which are expected to arrive about two hours before the opening bell in New York. Wall Street consensus adjusted EPS to $1.56 for the quarter with sales of $30.16 billion.
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Alibaba stock earnings news
Ali Baba has been under immense pressure and intrigue lately, as several crises have overlapped in recent weeks. First, Alibaba founder Jack Ma said he would step down and relinquish control of the former Alibaba subsidiary group of ants. Following immense pressure from Chinese regulators, Ma will reduce his current 50.5% control over the fintech giant. Ma owns 10% of Ant Group and then controls another part of his voting rights by owning a 34% stake in Hangzhou Yunbo Investment Consultancy, which owns another part of Ant Group. Alibaba also accounts for around a third of Ant Group. BABA Action fell around 5% when the new change was announced as it demonstrated that the Chinese government was still meddling with Alibaba.
Then there is the case of Securities & Exchange Commission (SEC), which placed Alibaba on a list of companies at risk of delisting if management refuses to share internal audits. These audits must be shared with the SEC US Public Enterprise Accounting Oversight Board (PCAOB)due 2019 Foreign Company Liability Act (HFCAA). BABA shares plunged more than 11% on the news last Friday. Sharing companies’ internal audits is currently banned by a 2009 Chinese law, although Chinese regulators say they are working to amend it to allow foreign stocks to be listed.
Alibaba released a statement saying it was doing everything in its power to stay listed on the New York Stock Exchangebut he seems to be hedging his bets by asking for a primary quote on the Hong Kong Stock Exchange (HKEX).
This brings us to Alibaba earnings release on Thursday. Of the nine analyst EPS revisions over the past 90 days, seven of them were downgrades. The most important point to make about the forecast is that analyst consensus says this quarter will be the first year-over-year revenue decline since the company’s IPO. Wall Street expects $30.16 billion while Alibaba brought in $31.8 billion in the same quarter last year. That would also be lower than last quarter’s $30.28 billion.
Eddie Leung of Bank of America Securities says domestic spending in China is still under pressure since the spring shutdowns took effect, but there is a gradual recovery. Most analysts believe that Alibaba will return to better growth in the second half.
Alibaba stock forecasts
The daily BABA stock chart below is not at its best. After shares of Alibaba surged past the March 23 peak in early July, shares fell rapidly and have mostly fallen since. Last Tuesday, BABA found perfect support at the lower rising trendline that has been in place since March 15th. This puts BABA in a symmetric wedge pattern with the top near $106. This makes $106 the up/down of the price trend. If BABA breaks above $106, then it is considered bullish. Below $106, where it currently stands, is bearish. To get out of the corner, BABA stock needs to cross the upper trendline at around $122.50.
Despite the last two sessions seeing BABA After the launch of support, the Moving Average Convergence Divergence (MACD) is trending lower – another bearish sign. Below the lower ascending trendline of the wedge is support at $82 and $74.
BABA Stock Daily Chart