Alibaba Earnings :  What is expected from the massive Chinese online retailer.

Before Thursday's opening bell, Alibaba releases its March quarter results.

 

                       Alibaba is projected to gain from China's economy opening up. ALIBABA GROUPS

The first earnings report from Alibaba Group Holding Ltd. following the announcement of a significant organizational reorganization is scheduled for Thursday.

The Chinese e-commerce company said in late March that it will restructure into six business units, each of which would have its own CEO and board of directors and be able to raise money from other sources or seek initial public offerings. Analyst Youssef Squali of Truist Securities claims that the action "is a material step to unlock shareholder value," and Alibaba BABA, -2.09% executives might discuss the development further on the earnings call.

Alibaba's management should provide structural updates in addition to explaining how the expanding Chinese economy is affecting the company.

While the March quarter (through the Chinese New Year) "started weak, demand trends improved throughout the second half of the quarter with the economy reopening," Squali wrote, anticipating that Alibaba might provide a "slight beat" for the most recent quarter.

It will also be crucial to provide commentary on the June quarter since, according to Mizuho analyst James Lee, the company will thereafter experience a return to positive growth in customer management revenue, which is effectively advertising revenue.

How Alibaba manages its investment spending in the current economy will be another thing to pay attention to.

Squali wrote, "We're encouraged by the current trends but note that management commentary on the recent earnings conference alluded to additional spending to support select growth initiatives, which although sound, are likely to keep margins under pressure in the near-term.

What to look out for in the next report, which is scheduled to be released before Thursday's opening bell.

What to plan for:

Earnings: According to analysts whose forecasts FactSet follows, Alibaba will have earned an adjusted RMB9.44 per share in its fiscal fourth quarter, up from RMB7.95 per share in the same quarter last year.

Sales: The FactSet consensus forecasts RMB208.7 billion in sales for the March quarter, up from RMB204.1 billion in the same period last year.

Share price movement: Seven of Alibaba's last ten earnings releases, including the most recent one, have been followed by a decline in the price of its U.S.-listed shares. Shares of Alibaba that are traded on the New York Stock Exchange are up 2.9% so far in 2023, but they are down 1.4% year to date. Although it has lost 7.3% so far this year, the KraneShares CSI China Internet ETF KWEB, -0.89% has gained 1.7% over the past 12 months.

With an average price target of $141.98 among the 62 analysts tracked by FactSet that cover Alibaba shares, 57 have buy ratings, three have hold ratings, and two have sell ratings.