Shares of Alibaba Group listed in Hong Kong (HK:9988) (NYSE:BABA) experienced a 1.7% decline as investors anticipated the upcoming quarterly earnings report, which is expected to reveal the impact of China’s economic challenges on the e-commerce giant. The decline mirrors a broader trend in the Hang Seng index. Alibaba’s shares have seen a 7% decrease in 2023, compared to an 11% decline in the Hang Seng.
Analysts estimate Alibaba’s earnings per share to be around 15.39 yuan, with revenue reaching 224.95 billion yuan ($31 billion) for the three months ending September 30. Meeting these estimates would signify profit and revenue growth for Alibaba, a positive development in the face of China’s economic downturn.
Alibaba has shown consistent profit growth by targeting low-cost products in its domestic unit. Additionally, revenue has benefited from the easing of supply chain issues as COVID-19 restrictions were lifted in China. However, recent economic indicators, including a return to disinflation in October, have raised concerns about consumer spending resilience.
Despite economic challenges, Alibaba’s competitor, JD.com (HK:9618) (NASDAQ:JD), reported better-than-expected quarterly results, generating optimism for Alibaba’s performance. JD.com’s shares rose nearly 3% in Hong Kong trade.
Investors will also closely watch Alibaba’s cloud unit, which has faced challenges in technology spending. The company triggered a price war in the cloud sector by reducing prices to attract customers. The cloud unit plays a crucial role in Alibaba’s pursuit of developing generative artificial intelligence.
Alibaba is expected to provide an update on its plan to split into six separate companies, a move aimed at appeasing Chinese regulators. The company will release its quarterly earnings before the U.S. market opens on Thursday.