Kit Yau, head of marketing for Australia and New Zealand at Alibaba Group, said in a speech. … [+]
Shares of Chinese e-commerce and cloud giant Alibaba are scheduled to report their 2024 Q4 results on May 14, with the company's business likely to show only modest growth amid headwinds in the domestic e-commerce market. We plan to report on quarters with high performance. The company's cloud business is experiencing slow growth. We expect earnings to be approximately $1.42 per share, slightly above consensus estimates, and sales to be approximately $30.5 billion, an increase of approximately 4% year over year. So what are some of the trends that could move Alibaba stock?
The company is plagued by multiple problems. For example, China's economy is recovering more slowly than expected from the coronavirus lockdown, a problem exacerbated by a weak real estate market. In the third quarter of 2024, revenue from the company's online marketplaces Taobao and Tmall increased by just 3% year-on-year. The situation may improve slightly from the fourth quarter of 2024 onwards, as China's retail sales rose 4.7% year-on-year in the quarter due to a surge in consumer spending during the Lunar New Year holiday. However, as Chinese consumers become more value-conscious amid the economic downturn, Alibaba faces intensifying competition in the e-commerce space, with discount e-commerce platforms Pinduoduo and Temu PDD, which operates the company, is increasing its market share. Alibaba's cloud business has also slowed, with Cloud Intelligence Group's revenue increasing just 3% to $3.95 billion last quarter, as U.S. export restrictions on advanced semiconductor chips hurt the company's business. This is also due to the fact that they were given.
BABA stock has suffered a steep 65% decline from its $235 level in early January 2021 to around $80 today, while the S&P 500 index has risen about 35% over the past three years. Notably, BABA stock has underperformed the broader market in each of the past three years. The stock returned -49% in 2021, -26% in 2022, and -12% in 2023. In comparison, the S&P 500 returned 27% in 2021, -19% in 2022, and 24% in 2023. – show it BABA underperformed S&P In 2021, 2022 and 2023. actual, Consistently outperforms the S&P 500 – Good times and bad times – The past few years have been difficult for individual stocks. We cover heavyweights in the consumer staples sector such as WMT, PG, and COST, as well as mega-cap stars such as GOOG, TSLA, and MSFT.
In contrast, the Trefis high-quality portfolio, which includes a collection of 30 stocks, Outperformed the S&P 500 every year over the same period. why is that? As a group, Headquarters portfolio stocks carried less risk and delivered better returns compared to the benchmark index. It's not been a roller coaster ride, as evidenced by the performance metrics of our corporate portfolio.
Given the current uncertain macroeconomic environment of high oil prices and rising interest rates, BABA may face a similar situation in 2021, 2022 and 2023. Underperform the S&P Will it recover in the next 12 months?
There are some signs that the regulatory troubles Alibaba faced in recent years related to its subsidiaries and digital payments giant Ant Group are now in the rearview mirror. Alibaba is also tweaking its e-commerce strategy to move closer to value-oriented players like Pinduoduo. For example, Taobao currently offers a “refund only” policy that allows customers to keep products they have purchased but complained about not matching the product description on the site. Alibaba's evaluation is also convincing. At the current market price of approximately $81 per share, BABA stock trades at less than 10 times forward earnings, but it does suggest that the company is likely to deliver high-single-digit growth over the next two fiscal years. When you think about it, we think this is very fair.Alibaba's overall valuation compares significantly favorably with US e-commerce giant Amazon.
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