Alibaba Group Holding Limited (NYSE:BABA) set to report its June quarter results

Alibaba Group Holding Limited (NYSE:BABA) set to report its June quarter results

Alibaba Group Holding Limited (NYSE:BABA) set to report its June quarter results

Alibaba is expected to show slowing revenue growth after years of blockbuster earnings when it reports fiscal first quarter earnings on Thursday. Its profitability, however, is likely to be improved.

Here’s what the market expects for Alibaba’s June quarter:

Revenue of 111.73 billion yuan ($15.93 billion), according to Refinitiv data. If realized, this would be a 38% year-on-year rise, but slower than the more than 61% growth seen in the same quarter last year.

Non-GAAP diluted earnings per share (EPS) of 10.25 yuan, according to Refinitiv estimates.

Alibaba’s core commerce business, which includes its Tmall and Taobao shopping platforms, is expected to be the biggest growth driver given it’s the company’s biggest division.

Headwinds

Alibaba’s investment into new areas has come at a price — falling margins. The company has signaled, however, that it will continue to invest, something that has so far not spooked the market. Investors will be watching the margin figure closely.

Another worry is the effect of the U.S.-China trade war.

“China e-commerce players have come under major pressure in light of worries around growth in the region and macro slowness. We believe … the bark is worse than bite at this point although this remains a major (‘prove me’) quarter for BABA,” Ives said.

Alibaba’s shares are up nearly 20% this year, but Wall Street thinks they can go higher over the next year. The average price target on the stock is $218.09, according to Reuters data. That implies a 34.5% upside from Wednesday’s close.

The Chinese e-commerce giant is also reportedly looking to hold an initial public offering in Hong Kong, which could raise as much as $20 billion. On Thursday, however, the New York Post reported that Alibaba was weighing whether to delay the listing, which was scheduled for September, amid the anti-China protests in Hong Kong. Alibaba declined to comment when contacted by CNBC about the matter.

Despite some of the near-term headwinds, Alibaba’s various investments should set it up for growth over the next few years, according to Thomas Chong, equity analyst at Jefferies.

“Alibaba has multiple growth drivers in the years ahead, in our view, with the core marketplace a strong cash cow enjoying secular momentum amid China’s ongoing consumption upgrade, thanks to solid execution and technological ability to digitalize the retail sector, thereby enhancing efficiency,” Chong wrote in a recent note.

“Its highly synergistic ecosystem enables it to ramp up easily in lower tier cities and local services. It has clear market leadership in cloud computing, which is the backbone of digitalization across different industries.”

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 171.20.

The projected lower bound is: 153.24.

The projected closing price is: 162.22.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 62.5040. This is not an overbought or oversold reading. The last signal was a buy 5 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 44.11. 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 buy 6 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 -33. This is not a topping or bottoming area. The last signal was a buy 4 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 sell 10 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -1.970 at 162.060. Volume was 7% below average (neutral) and Bollinger Bands were 41% wider than normal.

Open     High      Low     Close     Volume___
161.000 162.990 159.210 162.060 3,528,035
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 160.37 166.99 165.20
Volatility: 50 35 41
Volume: 3,494,286 3,699,221 3,762,081

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 1.9% below 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 9 periods.

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