Alibaba Group Holding Ltd
Alibaba Group Holding Ltd (NYSE: BABA) provides technology infrastructure and marketing platforms. The Company operates through seven segments. China Commerce segment includes China retail commerce businesses such as Taobao, Tmall and Freshippo, among others, and wholesale business.
Recent Financial and Business Updates:
- In the first quarter of 2023:
- Alibaba Group (BABA) reported a 2% year-over-year increase in revenue, amounting to RMB208,200 million (USD 30,316 million).
- Income from operations decreased by 9% year-over-year to RMB15,240 million (USD 2,219 million), excluding an item that would have resulted in a year-over-year increase of RMB11,569 million.
- Adjusted EBITA, a non-GAAP measurement, increased by 60% year-over-year to RMB25,280 million (USD 3,681 million), primarily due to improvements in China commerce adjusted EBITA and narrowed adjusted EBITA losses in Local consumer services and Digital media and entertainment.
- Net income attributable to ordinary shareholders was RMB23,516 million (USD 3,424 million). Net income was RMB21,996 million (USD 3,203 million), showing a significant improvement compared to a net loss of RMB18,357 million in the same quarter last year. This improvement was primarily due to net gains from equity investments in publicly traded companies, compared to net losses in the same period last year, partly offset by a decrease in share of profit of equity method investees, increased impairment of investments, and decreased income from operations. Non-GAAP net income was RMB27,375 million (USD 3,986 million), an increase of 38% year-over-year.
- For the fiscal year ended March 31, 2023:
- Alibaba's revenue was RMB868,687 million (USD 126,491 million), an increase of 2% year-over-year.
- Income from operations rose by 44% year-over-year to RMB100,351 million (USD 14,612 million), excluding certain items, it would have increased by RMB24,143 million year-over-year.
- Adjusted EBITA increased 13% year-over-year to RMB147,911 million (USD 21,538 million), primarily due to improvements in Local consumer services, international commerce, Digital media and entertainment, and China commerce adjusted EBITA.
- Net income attributable to ordinary shareholders was RMB72,509 million (USD 10,558 million), and net income was RMB65,573 million (USD 9,548 million), showing year-over-year increases of 17% and 39%, respectively. These improvements were mainly due to higher income from operations and reduced net losses from changes in the fair values of equity investments, partly offset by a decreased share of profit of equity method investees and increased impairment of investments. Non-GAAP net income was RMB141,379 million (USD 20,586 million), an increase of 4% year-over-year.
- During the quarter, BABA repurchased 21.5 million ADSs (equivalent to 172.4 million ordinary shares) for approximately USD 1.9 billion under its share repurchase program. As of March 31, 2023, the company had 20.5 billion ordinary shares (equivalent to approximately 2.6 billion ADSs) outstanding, with around USD 19.4 billion remaining under the current share repurchase authorization, effective through March 2025.
Technical Observation (on the daily chart)
The price of BABA stock has shown a consistent downward trend since making 52-week high on January 26, 2023, correcting around 16.87%. Currently, the stock has broken above an important resistance zone of USD 90.00-USD 100.00, from where price has taken resistance in the past, indicating a beginning of a short-term upward trend for the stock. The RSI (14 period) momentum indicator is in the oversold zone with a value of 68.87, with expectations of some consolidation or a further continuation of an uptrend. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels.
As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to Alibaba Group Holding Ltd (NYSE: BABA) at the current price of USD 101.57 as of July 31, 2023, 10:35 am PDT.
Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
How to Read the Charts?
The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.
The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.
The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.
The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
The reference date for all price data, currency, technical indicators, support, and resistance levels is July 31, 2023. The reference data in this report has been partly sourced from REFINITIV.
Abbreviations
CMP: Current Market Price
SMA: Simple Moving Average
RSI: Relative Strength Index
USD: United States dollar
Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.
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