• 16
  • 5
  • Favorite

Alibaba Stock Has Surged on China Growth Hopes. Earnings Could Derail the Rally

Dow Jones05-14

Alibaba Group Holding stock has been on a roll for the past month in response to hope that better times for China's economy could help its online retail business. Quarterly earnings from the company, due on Tuesday, could fuel the rally, or finish it.

While Alibaba's American depositary receipts are down 4% over the past year, trading for a fraction of the high they reached in late 2020, the stock has jumped 19% in the past month. The gain has come in response to optimism over the prospect of economic stimulus and growth in China, which has endured a market-rattling slowdown in the past year.

The latest leg higher for Alibaba came on Monday. The stock closed up 5.7% in U.S. trading as investors digested inflation data disclosed over the weekend. China's consumer price index rose 0.3% from a year earlier in April, up from a 0.1% increase in March and the 0.1% gain economists had expected.

That is a good sign for Alibaba because it indicates that consumers are buying again. Data showing deflation has rattled the stock because falling prices not only signal that demand is weak, but also give consumers a reason to delay making purchases.

Alibaba will report results for its March quarter on Tuesday. The company is expected to report earnings of 1.29 Chinese yuan (18 cents) a share from revenue of 220.6 billion yuan ($30.5 billion).

Investors will want to see the company meet or beat those results to send the stock higher. They will also focus on what management has to say about the outlook.

Alibaba doesn't typically give formal financial forecasts when it releases earnings, but management could still offer signals about consumption trends in China. News about the company's high-growth cloud computing and artificial intelligence arm could move the stock as well.

Good news out of Alibaba could keep the rally going, while bad news would do the opposite. That would strengthen the argument that the shares, which look cheap by most valuation metrics, are really a value trap.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment5

  • Danielng
    ·05-14
    Great article, would you like to share it?
    Reply
    Report
  • DKCL
    ·05-14
    Tot news is just excuse most of the time 🤣
    Reply
    Report
  • Oh really? Wouldn't those bad news already priced in the last 2 years? Becareful with what we read nowadays. 
    Reply
    Report
  • Andrewinho
    ·05-14
    Really? 🤔🤔🤔🤔
    Reply
    Report
  • Pilates
    ·05-14
    Ok
    Reply
    Report
 
 
 
 

Most Discussed

 
 
 
 
 

7x24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Company: TTMF Limited. Tech supported by Xiangshang Yixin.

Email:uservice@ttm.financial