Alibaba (BABA) Stock Dips Despite 7% Sales Surge: Unpacking the Earnings Miss

• Alibaba’s stock experiences a dip after reporting mixed results for the March quarter.
• While revenue surpassed expectations, earnings fell short of projections.
• The company’s board has approved a two-part dividend, costing a total of $4 billion.

Alibaba’s stock takes a hit following mixed Q1 results, with earnings falling short despite revenue exceeding expectations. The company also announces a two-part dividend.

Alibaba Q1 Results: A Closer Look

Alibaba Group (BABA) reported an adjusted earning of 10.14 Chinese yuan ($1.40) per American depository share on sales of $221.87 billion yuan ($30.6 billion) for the March-ending quarter. This fell short of the projected earnings of 10.27 Chinese yuan ($1.42) per ADS on sales of 220.58 billion yuan ($30.5 billion), according to FactSet. Comparatively, Alibaba posted adjusted earnings of $1.52 per ADS on sales of $29.62 billion for the same period a year earlier. Despite the shortfall in earnings, sales saw a 7% year-over-year increase in local currency for the March-ending period, which is Alibaba’s fiscal fourth quarter.

Dividend Announcement and Stock Performance

Alibaba’s board approved a two-part dividend, including an annual cash dividend of $1 per American depository share and a “one-time extraordinary cash dividend” of 66 cents per ADS. The total dividend will cost the company $4 billion. In the stock market today, U.S.-listed Alibaba stock is down 5% at 80.50 in recent after-hours action.

Alibaba Stock: Technical Ratings

Prior to the earnings report, Alibaba stock had gained 6% in Monday trading. Shares have gained 9% this year, aided by signs of improvement in the broader Chinese economy. However, shares have remained flat over the past 12 months. Alibaba stock had a weak IBD Composite Rating of 59 out of a best-possible 99, according to IBD Stock Checkup. This score combines five separate proprietary ratings into one. The best growth stocks have a Composite Rating of 90 or better. Additionally, Alibaba stock’s IBD Relative Strength Rating was 29 out of 99.

Conclusion

Alibaba’s mixed Q1 results, with earnings falling short of expectations despite a rise in revenue, have led to a dip in stock value. The company’s announcement of a two-part dividend may provide some reassurance to investors. However, with a weak IBD Composite Rating and a stagnant performance over the past year, it remains to be seen how the stock will perform in the coming months.