When Alibaba (NYSE: BABA) reports its second-quarter results prior to the start of trading on Thursday, it will be doing so during a period of uncertainty and change at the Chinese Internet and e-commerce giant.
Just in the last few weeks, Alibaba (BABA) has said it will seek a primary stock listing in Hong Kongfounder, and company figurehead Jack Ma said he would divest his holdings in, and control of Alibaba (BABA) financial technology affiliate Ant Groupand then the US Securities and Exchange Commission said it was adding Alibaba (BABA) to a list of companies facing potential delisting of their shares from US stock markets due to new laws involving the allowing of American regulators to inspect companies’ audit records. Alibaba (BABA) then said it would “strive” to keep its shares listed on the New York Stock Exchange.
Wall Street analysts currently estimate that Alibaba (BABA) will report a second-quarter profit of $1.56 a share, on $30.17B in revenue. However, the company is seen as possibly reporting its first year-over-year revenue decline since it went public.
Despite that, analysts on the whole say that there are signs that the Chinese Internet market is stabilizing, and that Alibaba (BABA) is in a position for growth to increase during the rest of this year.
James Lee, of Mizuho Group, said that he expects Alibaba (BABA) will show the gross market value [GMV] of products sold on its platforms returned to positive growth due to promotions held in June. Lee said such growth should help Alibaba (BABA) earn earnings forecasts.
At Bank of America Securities, analyst Eddie Leung said that in Alibaba’s (BABA) home base of China, the “domestic consumption environment is still under pressure,” especially with regards to clothing, cosmetics and other accessories. However, Leung said such sales have been on a “gradual recovery” since May, as evidenced in data from China’s state statistics bureau.
Leung said the talk about Alibaba’s (BABA) potential delisting from the US could “remain a source of stock volatility” for some time. Alibaba (BABA) shares have fallen 19% this year. Noted investor Charlie Munger recently said he isn’t worried about Alibaba (BABA) shares losing their US stock listing.