The bellwether stock for China internet companies, e-commerce giant Alibaba Group (BABA), reports quarterly results early Wednesday. The report on BABA stock could give insight into where the economy of the world’s most populous nation is headed.
Shares of Alibaba, like almost all China internet stocks, have been hammered the past two years. Alibaba is more than 70% off its record high set in October 2020. Factors in the downfall include a strict regulatory environment, economic weakness, Covid shutdowns, supply-chain issues, inflation and more.
Analysts are expecting Alibaba to report adjusted income of $1.07 a share, down 33% from the year-ago period, on revenue of $29.9 billion, up 3% for its fiscal fourth quarter. Alibaba will be reporting for the fourth quarter and full fiscal year.
Baird analyst Colin Sebastian this week lowered estimates on BABA stock.
“We recognize there is some optimism that the operating environment for Internet companies in China may be normalizing, and if that proves accurate, we believe there could be material upside in shares over the long term,” Sebastian wrote in a note to clients. “For now, however, we think management’s tone could remain cautious with respect to near-term growth and margins.”
BABA stock was down 4.8% to 83.10 in afternoon trading on the stock market today.
BABA Stock: Showing Confidence With Buyback?
As a sign of confidence in its performance, Alibaba recently announced it would increase its buyback program to $25 billion from $15 billion. In addition, it has already bought back 56.2 million shares for $9.2 billion.
“This was a very deliberate sign from the company they believe their stock is inexpensive,” Sebastian wrote. He has a rating of outperform on BABA stock with a price target of 144.
“Alibaba’s stock price does not fairly reflect the company’s value given our robust financial health and expansion plan,” Alibaba Chief Financial Officer Toby Xu said in written remarks when the company announced its buyback plan.
Wednesday’s Alibaba earnings report follows that of e-commerce competitor JD.com (JD). On May 17, JD reported first-quarter results that beat revenue expectations despite China lockdowns. JD stock surged. The company ended the first quarter with 580.5 million active annual customers, up 16%
BABA stock trades near a six-month low.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
YOU MIGHT ALSO LIKE:
China Stocks Rocket As Officials Signal An End To Regulatory Crackdown
China Lockdowns, Factory Closures Seen Hurting Apple
Sharpen Your Market Skills With MarketSmith
China Stocks To Buy And Watch