When Alibaba reports its quarterly results on Thursday, its ability to weather a slowdown in the world's second-largest economy will be in focus. This comes after peer company JD.com reported unexpectedly strong earnings on Wednesday.

Analyst Expectations

According to analysts tracked by FactSet, the consensus call is that Alibaba (ticker: BABA) will report earnings of 15.28 yuan ($2.11) per share from revenue of 224.5 billion yuan ($31 billion). If the results for the three months to the end of September align with these expectations, it would reflect a profit growth of 18% from a year earlier, with revenue up 8% from 2022 levels.

Alibaba's Performance

Considering the current context, these numbers would be quite impressive for Alibaba. Growth at the e-commerce and cloud-computing powerhouse has slowed due to weakness in China's economy. However, Alibaba reported better-than-expected results for its first quarter, thanks to a focus on improving efficiency and cutting costs.

Investor Optimism

Investors will be hoping for a repeat performance in the September quarter. The optimism seems to have been boosted following JD.com's Wednesday results, which surpassed Wall Street's estimates for earnings and revenue. As a result, Alibaba's American depositary receipts gained 3.8% in U.S. trading on Wednesday, while JD.com's ADRs gained 7%.

JD.com Credits Focus on Attracting Consumers with Lower Prices for Strong Results


JD.com, a major player in the e-commerce industry, has reported strong results, attributing its success to a focus on operating efficiency and attracting consumers with lower prices. This strategy is particularly relevant in the current economic climate, where consumer spending has been impacted, posing a threat to the e-commerce sector. In contrast, Alibaba's upcoming results are anticipated to be scrutinized for evidence of a similar strategy.

The Role of Cloud Computing in Alibaba's Future

Apart from its core e-commerce business, Alibaba's cloud-computing arm will also be under the spotlight. This division serves as the hub for its advances in artificial intelligence and is slated to be spun off as part of an extensive company restructuring plan initiated earlier this year. In this restructuring effort, Alibaba aims to transform itself from a conglomerate into a holding company, ultimately aiming to increase shareholder value. However, progress has been hindered by China's economic slowdown, which has negatively impacted capital markets. Nonetheless, Alibaba made an announcement in September regarding its application to separate its Cainiao logistics arm.

A Focus on Restructuring

Updates regarding the ongoing restructuring of Alibaba will be eagerly awaited. The company's decision to split itself up and transition into a holding company reflects its commitment to delivering value to shareholders. However, due to the adverse effects of China's economic slowdown on capital markets, significant progress has yet to materialize.

Stock Movements

In terms of stock performance, Alibaba's shares have experienced a slight retreat of 1.2% in 2023. Despite this dip, it still outperforms the Nasdaq Golden Dragon China Index, which has seen a decline of 3.5%. Conversely, JD.com's stock has suffered a substantial decrease of 49%.

Written by Jack Denton.

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