Alibaba Group Holding Ltd has more than doubled profit in the span of a year. But you wouldn’t know it from looking at its stock.
Its shares have lost more than a third of their value since peaking at US$120 just months after a record 2014 initial public offering, as the world’s largest e-commerce company struggles to recapture its aura. That’s despite revenue growth of at least 20% and trumping expectations on adjusted per-share earnings every quarter since its debut.
A slowing China and the consequent deceleration in online transactions are mainly to blame. Alibaba -- which handles more e-commerce than Amazon.com Inc and eBay Inc combined -- is a proxy for an economy navigating a bumpy transition from export-driven manufacturing to one anchored in consumer spending.
On Wednesday, Alibaba shares slipped after noted short-seller and hedge fund manager Jim Chanos told CNBC he’s betting against the company because of a lack of cash flow. Chanos also said he’s still bearish on China. The stock closed at US$75.82, down 0.1%. Chanos was reiterating comments he made on Alibaba late last year.
Alibaba will have to provide a catalyst when it reports earnings Thursday for investors to push the stock higher, such as a resurgence in revenue growth that slowed to 32% in the December quarter from more than 45% annually before the IPO. They’ll also be watching for progress in faster-growing South East Asia markets and the impact of Alibaba’s acquisition spree on its bottom line.
“Expanding growth or accelerating margins are the two things Alibaba can do to make investors more bullish. Otherwise it’s things they can’t control,” said Gil Luria, an analyst at Wedbush Securities Inc. “If the Chinese consumer strengthens or weakens a little, in the long term, it’s of little consequence. Alibaba represents a big chunk of consumption in China and it will grow as more people will become middle class.”
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Its shares have lost more than a third of their value since peaking at US$120 just months after a record 2014 initial public offering, as the world’s largest e-commerce company struggles to recapture its aura. That’s despite revenue growth of at least 20% and trumping expectations on adjusted per-share earnings every quarter since its debut.
A slowing China and the consequent deceleration in online transactions are mainly to blame. Alibaba -- which handles more e-commerce than Amazon.com Inc and eBay Inc combined -- is a proxy for an economy navigating a bumpy transition from export-driven manufacturing to one anchored in consumer spending.
On Wednesday, Alibaba shares slipped after noted short-seller and hedge fund manager Jim Chanos told CNBC he’s betting against the company because of a lack of cash flow. Chanos also said he’s still bearish on China. The stock closed at US$75.82, down 0.1%. Chanos was reiterating comments he made on Alibaba late last year.
Alibaba will have to provide a catalyst when it reports earnings Thursday for investors to push the stock higher, such as a resurgence in revenue growth that slowed to 32% in the December quarter from more than 45% annually before the IPO. They’ll also be watching for progress in faster-growing South East Asia markets and the impact of Alibaba’s acquisition spree on its bottom line.
“Expanding growth or accelerating margins are the two things Alibaba can do to make investors more bullish. Otherwise it’s things they can’t control,” said Gil Luria, an analyst at Wedbush Securities Inc. “If the Chinese consumer strengthens or weakens a little, in the long term, it’s of little consequence. Alibaba represents a big chunk of consumption in China and it will grow as more people will become middle class.”
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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