Alibaba, which has already been nicknamed "China's Amazon," offers B2B and B2C online sales services and operates in the cloud computing segment. It provides solutions for both businesses and individuals.
The company's high margin makes it one of the most efficient in the industry. In addition, it is experiencing rapid growth, increasing revenues by 29.3%, 34.8% and 12.08%, respectively, over the past three years.
Last quarter's results were higher than analysts had expected, despite the turmoil in China's economy and weakened consumer sentiment. Revenues came in at 205.6B yuan ($30.7B) versus forecasts of 203.2B.
Alibaba's profit was also above forecasts at 22.73B, beating the estimate of 18.72B yuan. As a result, the company’s EPS (earnings per share) in the US was 11.73, much higher than the forecast of 10.39 yuan. Thus, there was a 29% year-on-year increase in this indicator.
Despite the higher-than-expected results, it is worth mentioning that Alibaba recorded the first zero revenue growth in its history. The company has faced many headwinds, including the return of Covid in China, which led to a lockdown of major cities. This slowdown is now being exacerbated by civil unrest and signs of a banking crisis, preventing the e-commerce giant from spreading its wings.
Despite the problems, many investors and analysts are optimistic about Alibaba, and its target price remains high. From 45 recommendations on MarketScreener, only one is "Sell", and the average target price for the company shares is 155.13 dollars (HKD), implying a possible upside of 61.9%.
Yesterday, Alibaba stocks gained 5% following the earnings announcement. Today at 11:00 GMT+3, BABA is experiencing a minimal correction, losing less than 2.6% on the Hong Kong Stock Exchange. Perhaps, this move was evoked by news of China's extensive military manoeuvres around Taiwan and testing of missile weapons.
Rafał Tworkowski, Junior Market Analyst, Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
