What to Look for in Alibaba’s Q4 Earnings Report?

Alibaba Stock Price Prediction

Alibaba Group (BABA:NYE), the leading e-commerce and internet services provider in China, is expected to announce its fiscal fourth-quarter results on May 18. The company has been facing some headwinds from the regulatory environment and the competitive landscape in its home market, but it also has a lot of opportunities to grow its business in various segments such as cloud computing, international commerce, and digital media. Here are some key factors to watch for in the upcoming earnings report.

 

Revenue and Earnings:

Analysts expect Alibaba to report revenue of RMB 187.4 billion (about $29 billion), up 64% year-over-year (YOY), according to Investopedia. This would be a slight slowdown from the 69% revenue growth in Q3 FY 2021, but still a strong performance amid the pandemic-driven surge in online shopping and digital services.

The company’s adjusted earnings per share (EPS) are estimated to be RMB 10.32 (about $1.60), down 11% YOY, according to Investopedia. This would reflect the impact of a $2.8 billion antitrust fine imposed by China’s State Administration for Market Regulation (SAMR) in April, which Alibaba said it would record as an operating expense in Q4 FY 2021. Excluding the fine, Alibaba’s adjusted EPS would have grown by about 30% YOY.

BABA Ratings by Stock Target Advisor

Key Metrics:

  • One of the most important metrics to watch for Alibaba stock price prediction is its annual active consumers (AAC) in China, which measures the number of user accounts that placed at least one order on its platforms in the past 12 months. This metric indicates the size and loyalty of Alibaba’s customer base, as well as its ability to generate advertising revenue from merchants.

In Q4 FY 2021, Alibaba reported 811 million AAC in China, beating analysts’ expectations by about 20 million and growing by 11.7% YOY. This was the strongest quarterly growth rate in more than a year, suggesting that Alibaba maintained its market leadership despite regulatory scrutiny and rising competition from rivals such as Pinduoduo and JD.com.

  • Another key metric to watch for Alibaba stock price prediction is its cloud computing revenue, which represents its fastest-growing and most profitable segment. Alibaba is the dominant player in China’s cloud market, with a 40% market share according to IDC. The company has been investing heavily in expanding its cloud infrastructure and services, especially in areas such as artificial intelligence, big data, and internet of things.

In Q4 FY 2021, Alibaba’s cloud computing revenue grew by 50% YOY to RMB 16.1 billion (about $2.5 billion), accounting for about 9% of its total revenue. The company also achieved positive adjusted EBITA (earnings before interest, taxes, and amortization) for its cloud segment for the first time in Q3 FY 2021, indicating that it has reached a scale where it can generate profits from its cloud business.

 

Alibaba Stock Price Prediction-Future Outlook:

Looking ahead, Alibaba expects to generate more than RMB 930 billion (about $144 billion) in revenue for FY 2023, representing a growth rate of about 30% YOY. This guidance is based on the assumption that the Chinese economy will continue to recover from the pandemic and that consumer spending will remain strong.

However, Alibaba also faces some uncertainties and challenges in the future, such as the ongoing regulatory pressure from the Chinese government, the intensifying competition from other e-commerce and internet players, and the potential impact of geopolitical tensions between China and the U.S. on its global expansion plans.

Alibaba stock price has underperformed the broader market in the past year, declining by about 9% as compared to a gain of about 42% for the S&P 500. Alibaba stock has been weighed down by regulatory issues and the uncertainty over the future of Ant Group, Alibaba’s fintech affiliate that was forced to suspend its IPO last year due to regulatory intervention.

However, some analysts remain bullish on Alibaba’s long-term prospects, citing its diversified business portfolio, its strong cash flow generation, and its attractive valuation. According to Stock Target Advisor, Alibaba stock has a consensus rating of Strong Buy among 17 analysts, with an average price target of $142.69, implying a potential upside of about 57.35% from its current price of $90.68 as of May 17.

BABA Ratings by Stock Target Advisor

Summary:

Alibaba is scheduled to report its fiscal fourth-quarter results on May 18. The company is expected to post strong revenue growth driven by its core e-commerce business and its cloud computing segment. However, its earnings are likely to be affected by a hefty antitrust fine imposed by China’s regulators. Investors will also be looking for clues on how Alibaba plans to navigate the regulatory challenges and competitive pressures in its home market and abroad.

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