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Alibaba Group Holding Limited (NYSE:BABA) earnings soar but CEO warns that coronavirus could be ‘black swan’

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Alibaba Group Holding Limited (NYSE:BABA) earnings soar but CEO warns that coronavirus could be ‘black swan’

Alibaba had a great quarter to close out 2019, with strong gains in revenue and earnings that topped analysts’ forecasts.

The Chinese e-commerce giant managed to post a revenue gain of nearly 40% in the three months to December 31, while earnings rose almost 50% from the same period last year.

But Alibaba sounded a note of caution about the start of this year because of the coronavirus. It said the outbreak is an ongoing concern, and that it is doing all it can to help Chinese consumers cope.

“In response to the coronavirus, we mobilized Alibaba ecosystem’s powerful forces of commerce and technology to fully support the fight against the outbreak, ensure supply of daily necessities for our communities and introduced practical relief measures for our merchants,” Alibaba chairman and CEO Daniel Zhang said in a statement.

“We will support our merchants to overcome this challenging time together,” Zhang added.

Zhang was even more circumspect on the conference call with analysts. He called the outbreak a “black swan event” that “is having significant impact on China’s economy and may potentially affect the global economy.”

Zhang added that the coronavirus “will present near-term challenges to the development of Alibaba’s business across the board.”

Shares of Alibaba fell 3% in early trading following Zhang’s remarks. Alibaba rival JD.com and Chinese search giant Baidu also dipped.

It’s been a volatile year so far for Alibaba shares and other big Chinese techs like Tencent due to coronavirus fears.

Shares are up nearly 6% in 2020, but it hasn’t been a smooth climb. Alibaba’s stock fell more than 2.5% in January before rebounding in the past two weeks. The Chinese government has been encouraging people to turn to online shopping as quarantine measures kept millions under lockdown.

Chinese consumers continued to spend big on the company’s Taobao and Tmall platforms at the end of last year. Alibaba said that it set a record for Singles Day, a Chinese shopping extravaganza that takes place on November 11.

Its cloud business, like that of rival Amazon, is also thriving. Alibaba Cloud revenue surged 62% from a year ago in the quarter.

Alibaba recently completed a successful secondary listing of its shares on Hong Kong’s stock exchange. The company said it raised $13 billion from the offering, adding to its considerable war chest.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 231.09.

The projected lower bound is: 209.16.

The projected closing price is: 220.12.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 68.9463. This is not an overbought or oversold reading. The last signal was a sell 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 53.37. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 21 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 49. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 6 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -0.730 at 219.630. Volume was 35% below average (neutral) and Bollinger Bands were 3% wider than normal.

Open     High      Low     Close     Volume___
221.100 221.610 218.230 219.630 2,322,130
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 219.09 214.43 182.90
Volatility: 41 32 37
Volume: 3,673,563 3,335,080 3,581,656

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

ALIBABA GRP ADR is currently 20.1% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of BABA.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BABA.N and have had this outlook for the last 14 periods.

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