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Chinese internet companies grow their users bases and their ability to monetize them, could result in rapid revenue and earnings growth.
Alibaba Group stock edged up Friday as the China e-commerce giant received several price target hikes following its quarterly earnings report that beat views on the top and bottom lines.
Weibo (NASDAQ:WB) stock reports its earnings Monday before the bell. The China-based social networking company has suffered in recent months as both the trade war and a weak revenue outlook decimated Weibo stock. The equity has continued to fall as geopolitical events weigh on most Chinese stocks.Source: testing / Shutterstock.com Although WB stock shows a great deal of potential, investors face too much risk by buying this equity approaching earnings. WB's Last Earnings Report Will Affect the Current OneAnalysts forecast WB stock earnings of 59 cents per share. This would represent a 13.2% drop from the same quarter last year when the company reported 68 cents per share in profits. They also predict revenues of $429.3 million. The company reported $426.6 million in the year-ago quarter.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHowever, the revenue outlook for the second quarter hammered WB stock in May. The company announced a revenue outlook for the second quarter of $427 million-$437 million. This came in well below expectations. Up until then, Wall Street had expected second-quarter revenues of $481.8 million, as Regina Borsellino reported. That partially explains why WB stock has lost almost half of its value in the past four months. * 10 Cheap Dividend Stocks to Load Up On As the equivalent of Twitter (NYSE:TWTR) in China, Weibo has seen rapid subscriber growth. However, the company has struggled to monetize that growth. Weibo stock has also become caught up in the selling of Chinese stocks related to the U.S.-China trade war, despite the fact that it does not have direct exposure to the U.S. What WB Stock NeedsAs the company reports earnings, it still finds itself in need of a catalyst that will stem the decline. Weibo beat earnings estimates over the last four quarters. However, traders will want to see some indications that a massive revenue miss will not occur again.WB investors also need signs that the company will follow in the footsteps of its U.S. counterparts on better monetizing the site. Gaining traction with ads rescued both Twitter and Snap (NYSE:SNAP) in recent quarters. Weibo's investors want to see the same.Investors may have good reason to buy WB stock once the trade war abates. Weibo currently trades at a forward price-to-earnings ratio of 11.8. It has suffered a slight earnings slowdown this year. However, Wall Street forecasts earnings growth of 17.2% in fiscal 2020. They also expect annual profit increases to average in the double-digits over the next five years.To a degree, all Chinese stocks trade at a discount. This is due to investors having to buy Cayman Islands-based holding companies that represent firms in China. Still, I think the low forward P/E ratio prices in both that risk and the concerns over the trade war. The Bottom Line on Weibo StockDespite the low price, I would not buy WB stock before it announces earnings. Investors look into the future, so as long as earnings exceed expectations, I see no issues with the temporarily lower profits.However, traders also likely feel the sting of the much lower revenue outlook that came in the last earnings report. Weibo needs to avoid further surprises here. Moreover, the continued intensity of the trade war continues to spook investors. Fears that China will invade Hong Kong also have investors on edge. Chinese equities such as WB stock will feel the pain of such geopolitical actions whether or not they relate to the business.However, once the trade war ends, investors will probably see WB stock as an equity with a low P/E ratio registering double-digit profit growth. That makes for a promising outlook, eventually.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Weibo Stock Is Still a Risky Play appeared first on InvestorPlace.
China's e-commerce company JD.com is in talks with bankers to list shares of its online grocery and delivery joint venture in the United States in May and is seeking to raise $500 million, The Information reported on Friday. The talks are still in early stages, and the amount the company hopes to raise as well as the timing of the stock market offering could change, the report said, citing two people familiar with the matter. JD and Walmart did not immediately respond to requests for comment.
Alibaba is to acquire rival NetEase’s cross-border online shopping platform, according to two people familiar with the matter, as China’s highly competitive $2tn ecommerce market takes early steps towards consolidation. to Rmb114.92bn ($16.3bn), might pay about $2bn for Kaola, according to one person familiar with the deal. Chinese shoppers have turned in large numbers to online retailers, led by Alibaba’s Taobao and Tmall platforms and JD.com: spending roughly four times as much as their US peers.
(Bloomberg) -- Forget the world’s chaos for a moment. Alibaba Group Holding Ltd. is doing just fine.Despite a trade war, the slowing domestic economy and brutally aggressive competition, China’s largest technology company reported revenue and profit numbers that handily beat analyst estimates. Revenue rose a blazing 42%, while net income more than doubled. Shares popped 3% in U.S. trading.Insulated because of its predominantly domestic business, Alibaba is benefiting from a demographic shift to internet shopping. Chinese online sales accelerated in the June quarter, helped by sales promotions that unfolded across the country’s largest e-commerce platforms. Alibaba’s report dropped just as the risks of a recession spike, U.S.-China trade tensions ratchet up yet again and archrival Tencent Holdings Ltd. warns of a tough economic outlook.“It’s surprising how resilient Alibaba is,” said Michael Norris, a Shanghai-based research and strategy analyst at consultancy AgencyChina. “There’s a big disconnect between Wall Street, which has really given a beating to Alibaba’s shares, and people on the ground.”Revenue rose 42% to 114.9 billion yuan ($16.3 billion) in the three months ended June, while net income also came in ahead of expectations at 24.4 billion yuan. That was helped by more than 4.3 billion yuan of pretax profit from Ant Financial, the payments-to-lending affiliate controlled by billionaire Jack Ma.“Despite the macro environment not being as good as last year, Alibaba has launched a lot of new initiatives and the personalized product feed is helping maintain its growth rate,” said Steven Zhu, an analyst with Pacific Epoch. “Its live-streaming services and collaboration with international brands are helping.”The economic slowdown is eroding parts of the company’s sprawling empire of e-commerce, retail stores, delivery services and more. Revenue in its digital media and entertainment segment inched up just 6%, despite streaming service Youku enlarging its average daily subscribers by 40%. Growth in its cloud computing division, which commands half the country’s market share, slowed to a still-respectable 66%.Small and mid-sized enterprises may be leery of spending on ads -- Alibaba’s biggest source of income -- given the current environment. That prompted Chief Financial Officer Maggie Wu to tell analysts Alibaba is in no rush to monetize its new shopping recommendation feeds.Longer term, investors have raised flags about the impact on margins of Alibaba’s enormous spending on so-called new retail -- its effort to use technology to overhaul physical retailers -- and deepen its footprint in lower-tier cities and rural areas. Alibaba said it will continue to invest in those initiatives, as well as on-demand services like food delivery unit Ele.me, which is fighting a fierce, money-losing battle with giant Meituan.Alibaba is approaching a critical juncture just as Chief Executive Officer Daniel Zhang prepares to replace billionaire co-founder Ma as chairman in September. A U.S. campaign of tariffs and other curbs is heightening uncertainty around the world’s second-largest economy, while the emergence of rivals at home such as Pinduoduo Inc. tests its longstanding dominance of Chinese online retail.The e-commerce titan may be on the look-out for assets to bolster its lead. Alibaba is in talks to pay $2 billion for NetEase Inc.’s Kaola, which specializes in selling foreign goods to Chinese consumers, local media outlet Caixin reported.The company is also hatching plans to raise more capital. Alibaba’s quarterly performance bolsters its ambition of pulling off what could be Hong Kong’s biggest share sale since 2010. The company is said to have already filed confidentially for a stock listing, but it’s unclear when it might go ahead with the float given the widespread protests that have gripped Hong Kong over the past 11 weeks. Executives made no mention of the issue during their conference call.Overall, adjusted earnings per share came to 12.55 yuan versus the 10.3 yuan projected. Net cash slipped 4% in the quarter, depressed by a $250 million cash settlement reached last quarter on a U.S. federal class action lawsuit.The “key standout for us is that Alibaba’s China commerce business grew 40%, close to twice the rate of the China online retail industry,” said Neil Campling at Mirabaud Securities. “The scale benefits are paying off and Alibaba is enjoying both active consumer growth momentum and higher average spend.”\--With assistance from Zheping Huang and Sheryl Tian Tong Lee.To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Peter Elstrom at email@example.com, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Alibaba Group (NYSE:BABA) stock posted its quarterly earnings before market open this morning, but its strong first-quarter results beat are not likely to matter. The day before, Aug. 14, the Dow Jones Industrial Average fell 800 points. Fear in the markets is rising and threatens to scare off investors from China-based stocks.Source: BigTunaOnline / Shutterstock.com Despite the market volatility in the short term, what is there to like from Alibaba's first-quarter results?Before diving into its fiscal first-quarter numbers, look first at what Alibaba reported in the previous quarter. In its last quarter, BABA stock posted non-GAAP earnings per share of $1.28 (GAAP EPS of $1.47), with both figures beating expectations by a wide margin. Revenue grew a solid 51%, rising to $13.93 billion. After the results, BABA stock fell from around $195 to as low as $150 a month later. The U.S.-China trade war started intensifying at the time, pressuring investors to dump China-based stocks like Alibaba.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWithout that trade war, Alibaba stock should have traded well into the $210 range and higher. Instead, at a recent closing price of $162, its price-to-earnings ratio is just 4.3 times while its PEG ratio was 1.23.For its Q1, analysts had a consensus EPS estimate of $1.49 on revenue of $15.86, up roughly 30% from last year. And with all 18 analysts calling Alibaba stock a "buy" with an average price target of $218.94 (per TipRanks), investors must hold the stock and sit tight. Alibaba Stock's First-Quarter ResultsAlibaba reported earnings of $3.55 billion on revenue of $16.74 billion, up 204% from last year. Chinese stocks are suffering from the trade war yet Alibaba managed to cushion the negative impact of lower exports. Strong domestic demand lifted the active consumer base by 20 million. Active annual consumers at its China-based retail marketplaces reached 674 million. Core commerce revenue grew a solid 25% year-over-year, digital media advertising grew 6%, while cloud computing grew 66%, to $1.13 billion. * 10 Stocks Under $5 to Buy for Fall Drilling into the segments, the company's core commerce generated $14.14 billion, cloud computing generated $93 million and innovation initiatives generated$18 million. The cloud computing is the only segment that did not beat consensus. Still, an increase in average revenue per customer led the revenue growth for the cloud unit. In the June quarter, Alibaba launched over 300 new products and features related to the core cloud offerings. As it continues investing heavily in talent and technology infrastructure, Alibaba Cloud will continue growing. Strong Performance at Alibaba's Retail UnitThe fast-growing consumer community at Taobao lifted the growth in core commerce. Active annual customers grew, helped by referral programs through the Alipay app and a record-breaking 6.18 Mid-Year shopping Festival. Taobao expanded its market reach by attracting customers in less developed areas.Tmall, formerly the Taobao Mall, leads the consumer engagement and distribution platform for Chinese brands. During the quarter, the gross merchandise volume of physical goods, excluding unpaid orders, grew 34% year-over-year. Higher user numbers and average spending drove the growth in sales. Unavoidable Macro HeadwindAlibaba could have reported results as impressive as that of JD.com (NASDAQ:JD) but will not enjoy as big a jump in the stock price in the coming days. JD.com's market cap is 10 times smaller than that of Alibaba stock. Plus, the stock price is in the $160 range, which makes shares less liquid for small-time investors. When Alibaba splits its shares at 8:1, expect bigger rallies in future earnings reports. Writer William White explained the BABA stock split here.For its second quarter, JD.com reported revenue growing 23%, while earnings of $0.33 beat consensus by 25 cents. Service revenue grew 42% year-over-year while its operating cash flow almost doubled, to $4.53 billion. Its stock enjoyed a bounce of more than 10%. Whether an investor holds JD.com or Alibaba, the long-term prospects are strong for these firms. Alibaba is more comparable to Amazon (NASDAQ:AMZN). Both firms have a hugely successful online retail channel on the desktop and mobile, and Alibaba's cloud services is certain to bring in high profit margins in future quarters. At a forward P/E of 53 times, Amazon trades at a big premium compared to Alibaba. Alibaba's forward P/E is 19 times Bottom Line on BABA StockAlibaba will enjoy just a small bounce post earnings despite the company's outlook looking stronger than ever. Investors who remain unconcerned over the ongoing trade war should accumulate Alibaba stock.As of this writing, Chris Lau did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks Under $5 to Buy for Fall * 5 Stocks to Avoid Amid the Ongoing Trade War * 7 5G Stocks to Buy Now for the Future The post After Another Strong Quarter, Alibaba Stock Will Reward Long-Term Investors appeared first on InvestorPlace.
Anyone researching Vipshop Holdings Limited (NYSE:VIPS) might want to consider the historical volatility of the share...
iQIYI's (IQ) second-quarter 2019 results are expected to benefit from solid content slate, expanding original content portfolio and partnerships.