Alibaba (BABA) Q1 earnings preview: Regulatory risks in focus

Investors are clearly skeptical of the company’s future prospects, given the fact that the shares are trading on the low end of BABA’s historical P/E ratio range.


Chinese e-commerce giant Alibaba (BABA) doesn’t get the same publicity as its US-based big tech rivals, but the company continues to show high growth and high profitability. See what we’ll be watching for the company’s key Q1 earnings report below:

When are Alibaba earnings?

Thursday, May 13 before the opening bell

Alibaba earnings expectations

$1.82 in EPS on $27.7B in revenues in Q1

What to watch from Alibaba earnings

Despite, or perhaps because of, China’s ongoing aggressive handling of the COVID-19 pandemic, Alibaba hasn’t seen strong stock outperformance like many of its e-commerce rivals. The company controls fully two-thirds of China’s e-commerce market through Taobao and Tmall, but investors are clearly skeptical of the company’s future prospects, given the fact that the shares are trading on the low end of BABA’s historical P/E ratio range.

One dark cloud hanging over the company is governmental oversight. Last month, Alibaba (BABA) paid a $2.8 billion antitrust fine by Chinese regulators for abusing its market dominance over merchants and rivals, and many observers have noted that Alibaba’s CEO, Jack Ma, may not be on the best terms with the CCP’s leadership. This personal tension creates additional regulatory risk that the major US technology giants don’t have, at least at the moment, so any comments on this front could have a big impact on the stock.

Outside of that key story, traders will also watch the figures for the company’s fast-growing cloud computing division as well as any new business initiatives and the outlook for the full year’s financial figures.

Alibaba (BABA) technical analysis

As we’ve hinted a couple times already, BABA’s stock is in the midst of a rough stretch. Since peaking near $320 back in October, the stock has fallen all the way to the low-$200s, where it’s spent most of the year to date consolidating. At press time, BABA is testing its lowest level of the year near $220, with both the 50- and 100-day EMA trending lower. Against this backdrop, a disappointing earnings report could be the catalyst for a breakdown toward $200 or lower, whereas a stronger-than-anticipated earnings report may only take rates up to the April highs in the $240-$245 range.

Source: TradingView, StoneX

Learn more about equity trading opportunities.

How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade.

Build your confidence risk free

More from Tech Stocks

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.