Alibaba Stock Dips Below Buy Zone Ahead Of First-Quarter Earnings

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Two of China’s largest e-commerce companies, Alibaba (BABA) and Pinduoduo (PDD), both report quarterly results early Friday, as online sales in that country are showing signs of returning to levels seen prior to the coronavirus outbreak. Alibaba stock and Pinduoduo each traded lower Thursday.

Wall Street expects Alibaba to report adjusted earnings of 85 cents per share, down 34% from the year-ago period. Analysts see revenue of $15.1 billion. That’s up 8.6% but its slowest growth in more than four years.

Alibaba is the largest e-commerce company in China by volume.

Alibaba and other Chinese stocks fell on Wednesday, but closed well off intraday lows, as the U.S. Senate passed a bill that could eventually put their U.S. exchange listings at risk. The bill doesn’t appear to threaten near-term consequences, however.

Alibaba Stock Action Ahead Of Earnings

Alibaba stock fell 1.6%, near 213.50, during morning action on the stock market today. After hitting a six-month low of 169.95 in mid-March, Alibaba stock has climbed about 28%. Shares last week moved above their 50-day moving average.

Alibaba on Tuesday broke out above a 216.20 buy point in a cup with handle, then pulled back.

Alibaba and Pinduoduo both report earnings before the market open Friday.

Pinduoduo runs the third-largest e-commerce platform in China by gross merchandise volume, behind Alibaba and JD.com (JD). Its e-commerce website includes a social media element.

Wall Street expects Pinduoduo to report an adjusted loss of 32 cents, vs. an 18-cent loss in the year-ago period. Pinduoduo has yet to show a profit. Analysts expect revenue of $741 million, up 9.5%. That would be its slowest growth in eight quarters.

Pinduoduo stock was down 2.4%, near 59.75.

Pinduoduo Shares Have Doubled

Since hitting a six-month low of 30.20 in mid-March, Pinduoduo stock has doubled. Shares hit a record high of 69.50 on Tuesday, then pulled back.

JD.com reported better-than-expected first-quarter results last week, as user growth jumped during the coronavirus lockdown. JD.com stock hit a record high Tuesday. The stock was down 1.3%, near 53.60.

According to a report from the National Bureau of Statistics of China last week, e-commerce sales of physical goods increased 16% in April from the year-ago period. That’s up from an 11% gain in March and 3% for January and February.

“Generally speaking, with main economic indicators improving in April, the national economy is gradually returning back to normal,” the China report said. “However, we should be aware that given the continuous spread of the epidemic abroad, the stability and recovery of the national economy is still faced with multiple challenges.”

Overall retail sales of consumer goods dropped 7.5% in April, but that’s an improvement from a 16% decline in March.

“Based on the data, we have increased confidence in our June quarter Alibaba estimates,” Raymond James analyst Aaron Kessler said in a recent note to clients. “We reiterate our strong buy rating on Alibaba stock.”

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