Alibaba (BABA) Stock Takes a Hit Post-Fiscal Q4 Results: Is Now the Time to Invest?

• Alibaba stock took a hit Tuesday morning, despite a slight revenue beat, as investors focused on an earnings miss.
• Adjusted earnings for Alibaba (BABA) were down 10% year over year, with revenue edging higher by 1% to $30.7 billion.
• The company also announced a two-part dividend, including an annual cash dividend and a “one-time extraordinary cash dividend.”

Alibaba stock experiences a downturn despite a slight revenue beat, with investors focusing on an earnings miss. The company also announced a two-part dividend.

Alibaba’s Earnings Miss

On an adjusted basis, Alibaba (BABA) earned $1.40 a share, down 10% year over year. Revenue edged higher by 1% to $30.7 billion. The company also announced a two-part dividend. It includes 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 $4 billion, the company said.

Alibaba’s Restructuring Challenges

In late March, Alibaba abandoned plans to list its logistics arm in Hong Kong, but the news didn’t do anything to lift Alibaba stock out of its downtrend. The cancellation of the listing poses more challenges to a restructuring plan announced last year by Alibaba, which would’ve split the e-commerce giant into six separate companies.

Recent Earnings

BABA stock rallied sharply on Feb. 6 after the company reported fiscal Q3 revenue of $36.7 billion, up 2% from the year-ago quarter and slightly above the $36.16 billion consensus. But adjusted profit fell 4% to $2.67 a a share. Investors also liked the fact that Alibaba added $25 billion to its share buyback program through March 2027.

Alibaba Stock News

Alibaba stock soared above its 200-day moving average on July 7 after Chinese regulators fined Alibaba’s financial arm, Ant Group, just under $1 billion. In March 2023, Alibaba announced plans to separate into six separate units. The company said each business will have the ability raise outside funding and even pursue an IPO.

China/U.S. Relations

Sentiment was weak around Chinese stocks in October after the Biden administration announced new restrictions on China’s access to U.S. semiconductor technology, including restrictions on the exports of some types of chips used in supercomputing and artificial intelligence. It also imposed tighter rules on the sale of chip equipment to China.

Alibaba Stock Fundamental Analysis

The company has a five-year annualized earnings growth rate of 6%, although fundamentals have weakened considerably in recent quarters. Alibaba’s Composite Rating of 67 (on a scale of 1-99 with 99 being the best) is lukewarm and is hurt by soft fundamentals and weak 12-month price performance.

Alibaba Stock Technical Analysis

Alibaba’s relative strength line started to swing higher when the stock bottomed in the second half of April. A stock’s relative strength line, found in daily and weekly charts at Investors.com, compares the stock’s daily price performance to the S&P 500. An upward-sloping RS line means the stock is outperforming the S&P 500. A downward-sloping line means the stock is lagging the S&P 500.

BABA Stock: Is It A Buy Now?

Overhead supply issues were a concern for Alibaba stock when the stock was more than 30% off its high. Now Alibaba stock is back above all of its key moving averages. Alibaba stock gapped above its 50-day line on Nov. 15 and closed near its session high on a strong day overall for Chinese stocks. Normally, it would’ve been a buy signal but BABA’s 200-day moving average at the time around 89.50 was a potential resistance level to watch.

Conclusion

Despite a slight revenue beat, Alibaba’s stock took a hit due to an earnings miss. The company’s restructuring plans also face challenges, but the stock has shown signs of recovery. Investors should keep a close eye on Alibaba’s performance in the coming months.