Alibaba shares were about to open higher on Thursday after the company reported earnings. But the sellers pushed the stock lower after BABA stock encountered resistance near 89. It seems that BABA stock is for sale after the recent sell-off, but is Alibaba stock buying now?
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The company reported adjusted earnings of $1.56 per share, up 25% year over year, with revenue down 6% to $30.32 billion. Ali Baba (Baba) also said that its board of directors has agreed to spin off the cloud intelligence business within 12 months. Freshippo, the company’s grocery and fresh-goods retail chain, has also been given the go-ahead to pursue an IPO, along with its logistics arm Cainiao Smart Logistics.
BABA stock rose 14% on March 28 due to reports that the company is planning to spin off into six separate units.
The company said that each business will have the ability to raise external funding and even pursue an IPO. According to the report, the company is likely to retain its cloud/AI business and e-commerce giant’s operations.
- Cloud intelligence
- Taobao Tmall Trade
- local services
- Cainiao smart logistics
- global digital trade
- Digital media and entertainment
Alibaba stock news
Alibaba shares plunged on April 12 after news that Japanese giant SoftBank Group had sold most of its stake in Alibaba. At one point, Softbank owned a 25% stake in BABA worth over $100 billion.
The day before, Alibaba stock plunged on April 11 after the company officially joined the AI race with the launch of its generative AI system.
Alibaba said the ChatGPT-style AI system will first be added to DingTalk, Alibaba’s workplace messaging app, as well as Tmall Genie, its smart speaker system.
The news comes next Baidu (beginning) launched its own chatbot last month.
An intraday 6% gain for Alibaba shares on Feb. 23 faded to a loss of 0.65% despite better-than-expected third-quarter financial results. Adjusted earnings rose 5% to $2.79 a share, well above expectations of $2.37. Revenue fell 6% to $35.9 billion, just ahead of $35.76 billion.
“We had a strong quarter despite weak demand, supply chain and logistical disruptions due to the impact of changes to COVID-19 measures,” said CEO Daniel Chang. “Looking forward, we expect a continued recovery in consumer confidence and economic activity.”
Alibaba stock jumped 3% on Feb. 9 after news that the Alibaba Dharma Academy — a research institute focused on science and technology — was working on a ChatGPT-like dialogue bot. However, Alibaba shares gave back early gains, affected by the general market weakness.
But regulatory concerns for Chinese stocks such as Alibaba are receding. One of China’s top regulators recently said that the country is close to ending investigations into operators of internet platforms such as Alibaba.
Sentiment was also positive in Alibaba shares on January 9 after Goldman Sachs placed Alibaba on a condemnation buy list.
Singles day
Papa along with JD.com (Dinar), has not released a specific total merchandise size for Singles’ Day on November 11, which is the world’s largest annual shopping event. Alibaba said the volume was similar to last year, when the company reported total merchandise volume of $84.5 billion, up more than 8% from the year-ago period. But that was a sharp slowdown from 26% growth in 2020.
Sentiment around Chinese stocks was weak in October after the Biden administration announced new restrictions on China’s access to US semiconductor technology, including restrictions on exports of some types of chips used in supercomputing and artificial intelligence. It also imposed stricter rules on the sale of chip equipment to China.
Alibaba stock rose sharply in late August on reports that Beijing and US regulators were close to a scrutiny deal.
In late July, the US Securities and Exchange Commission added Alibaba to a list of Chinese companies at risk of delisting for not opening their books to US accounting regulators.
Alibaba shares jumped on June 17, but pared early gains after Reuters reported that China’s central bank had accepted Ant Group’s request to set up a financial holding company.
In early November 2020, the Ant Group’s $34.5 billion IPO in Shanghai and Hong Kong was suspended by Chinese authorities. Ant Group is the financial technology arm of Alibaba. The decision to suspend the IPO came after Shanghai Stock Exchange officials said the exchange would halt the listing due to the company’s inability to meet conditions amid changes in the regulatory environment.
recent earnings
As part of its November 17 earnings report, which showed adjusted earnings increasing 5% year-over-year to $1.82 per share but revenue fell 6% to $29.1 billion, BABA said it was increasing its share buyback program by $15 billion. This is in addition to an existing $25 billion program. As of November 16, the company said it had already repurchased $18 billion worth of shares under its current program.
In early August, Alibaba reported fiscal first-quarter revenue of $30.7 billion, down nearly 4% from the year-ago quarter but just above the consensus of about $30 billion. Adjusted earnings of $1.75 per share was also above the consensus of $1.58.
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Alibaba’s China trade sector fell 1% to $21.19 billion. The company’s cloud segment generated $1.59 billion in revenue, up 10% year-over-year.
Sellers hit BABA stock
Increased regulatory scrutiny has taken its toll on Alibaba and other Chinese stocks over the past two years. Besides the strict regulatory environment, Chinese stocks are also dealing with a slowing economy.
In April 2020, Chinese regulators fined Alibaba $2.8 billion after an antitrust investigation. At that time, BABA stock seemed ready to exit a downtrend. But the stock has moved away from the 50-day moving average. It tried to rise above the 50-day line again in late April, but sellers pushed the stock lower again.
BABA stock collapsed another 8% on November 10 after Chinese regulators announced draft new antitrust rules for Chinese internet platforms such as Alibaba and JD.com, among others.
Fundamental analysis of Alibaba stock
In recent years, it’s hard to find a company with a more impressive growth record than Alibaba. The company has enjoyed a five-year annual earnings growth rate of 13%, though fundamentals have weakened significantly in recent quarters.
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Alibaba’s composite rating is 71 (on a scale of 1-99 with 99 being the best). It started to fall amid recent price weakness.
Declining revenue over the past four quarters, coupled with an annualized return on equity of 16%, gives Alibaba a tepid SMR (sales + margins + return on equity) rating of C from IBD stock check (on an A-to-E scale with A peaks).
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According to Zacks, Alibaba is expected to earn $7.67 per share in current fiscal year 2023, down 8% compared to fiscal 2022. But growth is expected to pick up in 2024, up 10% to $8.44.
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Alibaba stock technical analysis
Alibaba’s RSI line started to trend downward after Alibaba’s stock reached a high of 105.05 in late March.
The stock’s Relative Strength line, found in daily and weekly charts on Investors.com, compares the stock’s daily price performance to the S&P 500. An upward sloping RS line means the stock is outperforming the S&P 500. The stock is lagging behind the S&P 500.
Alibaba’s backlog/distribution rating improved slightly to a C, buoyed by some significant volume declines in recent weeks.
BABA Stock: Is it a Buy Now?
Overall supply issues remain a concern for Alibaba stock as the stock is down about 30% from its high
The decisive move above the 50-day line on November 15 was enough to remove BABA stock from its downtrend and give a buy signal. But the stock is starting to stretch after rising 19% during the week ending Dec. 2.
Alibaba stock broke out again during the week ending Jan. 6, the same day the Nasdaq Composite and S&P 500 set follow-up days. It rose more than 16% before falling back.
Alibaba stock fell sharply below its 50-day moving average on April 12, distorting its handle bottom. It was a flawed pattern because the knob that started forming on March 31st was a bit on the bottom half of the base.
Alibaba was pushed back at the converging 50- and 200-period moving average lines on Wednesday, but the 100 level still looms as a potential resistance level. BABA stock still needs to prove itself further, and a move above Wednesday’s high could pave the way for a rally towards 100.
Follow Ken Sheriff on Twitter @employee For more market statistics and analysis at the moment.
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