Alibaba earnings: What to expect
Alibaba will report first-quarter earnings before the markets open Wednesday, in a potential test of whether the e-commerce giant can weather sluggish growth in the Chinese economy.
Analysts estimate Alibaba will report earnings of 58 cents a share off $3.4 billion in revenue for the quarter. Concerns over economic turmoil in China continue to linger. On Tuesday, China’s yuan slid nearly 2% following data that shows trade was growing weaker.
"People are really wondering about the potential and actual impact on Alibaba’s financial results," says S&P Capital IQ analyst Scott Kessler.
As Alibaba approaches a full year since the launch of its initial public offering last September, the stock has tumbled. After reaching a high of $119.15 in November, Alibaba shares plunged below $80.
However, Alibaba’s business is still “very healthy,” says Kessler. “They’ll continue to make substantial investments.”
Recent moves by Alibaba suggest the company is making a big push toward international expansion. They hired Goldman Sachs executive Michael Evans as president, where he will help develop Alibaba’s international plans.
Last month, the company announced it will invest $1 billion into its cloud computing business, citing the growth of fellow tech giant Amazon. Earlier this year, Alibaba's cloud-computing service Aliyun opened a data center in the U.S., and more are planned for the Middle East, Singapore, Japan and Europe.
“Amazon has been able to grow a tremendously successful cloud business by realizing they have so much capacity in their own data centers, that they could lease some of that capacity out and do so at a very high margin," says Wedbush Securities analyst Gil Luria. "Alibaba saw how successful Amazon was and decided to jump into the fray.”
Luria says Alibaba will likely report another strong quarter, and does not expect the e-commerce giant to note struggles in the Chinese economy.
“They’ve reported two very strong quarters as a public company,” he says.
Follow Brett Molina on Twitter: @brettmolina23.