Alibaba Group Holding Limited (NYSE:BABA) set to report second quarter fiscal 2020 earnings results before the opening bell
Is this the quarter Alibaba (BABA) stock reclaims the $200 threshold? The shares have fallen 7% over the past six months, compared to a 3% rise for the S&P 500 index. Investors are looking for a reason to buy. Will BABA provide it?
The Chinese e-commerce giant is set to report second quarter fiscal 2020 earnings results before the opening bell Friday. As with Chinese peers JD.com (JD) and Baidu (BIDU), Alibaba has suffered amid tense trade negotiations between the U.S. and China. Macroeconomic concerns regarding tariffs and the company’s investments in growth are among the factors that have weighed on the BABA stock. But there are reasons to be excited ahead of Friday’s results.
The company’s recent investments, particularly its “new retail” efforts aimed at merging elements of online and offline commerce, are poised to pay off. Alibaba has also rolled out various products aimed at meeting the needs of customers who are migrating more towards the realm of Artificial Intelligence, Machine Learning and Internet of Things. And while the cloud remains a relatively small revenue driver for Alibaba, compared to Amazon (AMZN) and Microsoft’s (MSFT), Alibaba remains confident about the cloud’s long-term trends of the business.
Friday’s results, along with the company’s guidance, will reveal how much confidence the management really have in these growth areas. The guidance will also give investors a gauge on BABA’s relative valuation to its tech peers. The guidance will also give analysts insight into the company’s profit margins, which have contracted in recent quarters due to the aforementioned investments in growth.
In the three months that ended September, Wall Street expects Hong Kong-based online retailer to earn $1.50 per share on revenue of $16.46 billion. This compares to the year-ago quarter when earnings came to $1.40 per share on revenue of $12.4 billion. For the full year, ending March 2020, earnings are projected to rise 23% year over year to $6.87 per share, while full-year revenue of $72.35 billion would rise 32% year over year.
In its first quarter results, reported August, Alibaba beat on both the top and bottom lines, reporting Q1 revenue of $16.74 billion, which rose 42% year over year and beating estimates by roughly $1 million. Q1 adjusted EPS of $1.83 beat by 34 cents. The growth was driven by the company’s core commerce business, which rose 44% year over year. Just as impressive, annual active consumers on Alibaba’s China retail marketplaces reached 674 million, or 20 million more from the year-ago period.
The company, which had pushed to grow into lower-tier Chinese cities, said that more than 70% of the 20 million new consumers came from less-developed cities. On Friday investors will pay close attention to see whether these growth trends can continue. All told, Alibaba’s integrated ecosystem spanning from e-commerce, new retail, cloud, consumer services and FinTech will allow the company to maintain its dominant market share in China, suggesting the stock is undervalued.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 170.71.
The projected upper bound is: 187.20.
The projected lower bound is: 166.20.
The projected closing price is: 176.70.
A black body occurred (because prices closed lower 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 28 black candles for a net of 7 black candles.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 73.6008. This is not an overbought or oversold reading. The last signal was a sell 0 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 54.98. 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 61 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 78. This is not a topping or bottoming area. The last signal was a sell 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 13 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed down -0.860 at 176.670. Volume was 29% above average (neutral) and Bollinger Bands were 17% narrower than normal.
Open High Low Close Volume___
179.000 179.030 175.500 176.670 3,713,100
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 173.91 172.99 172.34
Volatility: 39 39 37
Volume: 2,406,971 2,449,878 3,218,221
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.
ALIBABA GRP ADR is currently 2.5% above its 200-period moving average and is in an upward 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 bullish on BABA.N and have had this outlook for the last 2 periods.