Alibaba Group Holding Limited (ALIBABA) will report its unaudited financial results for the quarter ended September 30, 2019 before the US market opens on Friday, November 1, 2019. It will be followed by a conference call to discuss the financial results at 7:30 a.m. US Eastern Time on the same day. Alibaba was listed in NYSE on 2014 in which Alibaba’s IPO was the biggest in the US Stock history at $25 billion(Bigger than Facebook, Google & Twitter combined).Currently, Alibaba is the fifth largest internet company in the world and it was the first Asian company to be valued over $400 billion and the second to be valued over $500 billion.Amazon is the biggest competitor of Alibaba. However, unlike Amazon, Alibaba itself is not a retailer. Instead, it provides infrastructures for ecommerce.
Fundamental
In its most recent quarter ended June 30, 2019, Alibaba released its report that essentially blew away analysts’ estimates.
Alibaba revealed a 42% increase in revenue on year-on-year, with its e-commerce and Cloud services revenue expanding 44% and 66% respectively. The company is showing no signs of slowing down as the company’s total revenue was 20% higher than the three months prior.
Majority of market analysts anticipate that the 3rd Quarterly Financial Report will be positive as compared to the previous quarter. Analysts expect ALIBABA to post earnings of $1.50per share (y/y growth of 10%). Average estimate revenue is estimated at $16.47B.
Over the last 12 months, the company generated US$4.73 in earnings per share (EPS). At its Friday closed price of US$174.58, that translates to a price-to-earnings ratio of 37X. ALIBABA is currently trading at a Forward P/E ratio of 27.17.
Despite the uncertainty and escalated risk of the trade war,ALIBABA has grown its annual revenues by an average of 56% between 2017 and 2019, adding US$33 billion to its top line in just two years. Ultimately, Alibaba’s stock appears to be significantly undervalued right now.
Technical
Currently, ALIBABA share is trading at $174.58 (Friday close, 25th October). It is far below the 12-month high of $ 195.72. However, ALIBABA share prices have risen 27% year to date (YTD) 2019 and overall 20.55% over the past 12 months. From a technical standpoint, ALIBABA stock prices still have room to the upside ahead of the 3rd quarter financial report and after the report was published.
From a price action standpoint, the ALIBABA price is currently in the bullish phase where the ALIBABA nicely bounced from 52 week low $129.77. Price currently show a consolidation in which triangle pattern is formed. The consolidation phase is further proved by the convergence of 50 DMA and 200 DMA. Current market behaviour indicates that the investor is waiting for a fresh catalyst for the stockprice to move further. The next support is in the range of $171-$172 and followed by $162.00. The next key resistance is at $184.00 and the 6-month high is $195.42.
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Tunku Ishak Al-Irsyad
Market Analyst – HF Educational Office – Malaysia
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