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Alibaba Earnings News: BABA Earnings Disappoint

  • Alibaba shares fall more than 5% in Tuesday's premarket session.
  • Alibaba publishes results for the fiscal fourth quarter, which ends in March.
  • Adjusted EPADS beat consensus by 2 cents, down 12 cents from a year ago.
  • Revenue increases 7% annually thanks to the greater weight of AliExpress and Lazada.

Alibaba (BABA), perhaps China's best-known company, released fiscal fourth-quarter earnings early Tuesday that depressed traders. BABA shares have fallen more than 5% in Tuesday's pre-market session after the internet conglomerate and retail powerhouse said it earned $1.40 in adjusted earnings per average deposit share (EPADS) for the quarter. which ended on March 31.

This figure beat the Wall Street consensus by 2 cents, but revenue of $30.73 billion beat the median forecast by $310 million and was up 7% year-over-year.

The broader US market retreated slightly in Tuesday's pre-market session, after the US Producer Price Index for April rose slightly above expectations by 0.5% monthly. Before the publication, economists had opted for a forecast of 0.3%.

Alibaba Earnings News

The fiscal fourth-quarter profit figure was 12 cents lower than last year's bottom line of $1.52 for EPADS, signaling to the market that the Alibaba-founded company has yet to emerge from its three-and-a-half-year slump.

Unadjusted diluted earnings per U.S. listed share were $0.18, a sharp drop from a year ago, primarily due to mark-to-market losses experienced by Alibaba's investments in other companies. . China's economy has been depressed in recent years as US trade barriers and the country's housing crisis have dented valuations.

Of course, management chose to focus on the positive side of the results, which included $12.5 billion in share buybacks over the past year, a commitment to continue buybacks, a new $1 dividend for next fiscal year payable after June 13 and a new special dividend of $0.66.

“Eddie Wu, CEO of Alibaba Group, said: “Our China and international trade businesses have seen double-digit annual GVA growth thanks to our focus on customer experience, and we are also excited about the accelerated growth of customers and cloud computing revenue related to our AI products.”

The subsidiary of the Taobao and Tmall Group, Alibaba's largest segment, reported revenue that increased by a dismal 4% annually to $12.9 billion. Cloud Intelligence Group saw annual revenue growth of just 3% to $3.5 billion.

The subsidiary Alibaba International Digital Commerce Group, which includes AliExpress and Lazada, is distancing itself from the rest of the parent company. Revenue rose 45% from a year earlier, to $3.8 billion. Combined orders from the various e-commerce platforms increased by 20% annually.

Logistics subsidiary Cainiao also had a good quarter, with revenue 30% higher than a year ago, to $3.4 billion. Local services recorded an annual increase of 19%, while the digital media and entertainment group's sales fell 1% in the same period.

Alibaba Stock Forecast

In the pre-market session on Tuesday, BABA stock lost the $80 support level as it traded down more than 5.5%. If this continues in the regular session, it will be bad news. It took almost seven months for BABA investors to recover the $80 level in early May and it has acted as occasional support on several occasions since March 2022.

If it can't hold on to $80, then the market will surely send BABA stock back to the $70 level, where BABA has found fleeting support in the first four months of this year, as well as temporarily in October 2022 .

To return to a bullish technical pattern, BABA stock must close above last November's range high at $87.83 on the weekly chart. Over the past month, Alibaba's weekly chart shows the moving average convergence divergence (MACD) turning back towards a bullish crossover, so there is some hope that the recent enthusiasm will not fade completely.

BABA Stock Weekly Chart

Source: Fx Street

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