The Chinese ecommerce giant, Alibaba (BABA, Financial), is expected to report the financial results for its December quarter on January 29, and lots of expectations are piling up from the analysts’ corner. As Alibaba’s IPO created a new history on the NYSE, the Street has raised its estimates on Alibaba’s earnings and expects the ecommerce honcho to gift a promising set of numbers for the investors. Everything looks rosy for Alibaba right now and with CEO, Jack Ma addressing at the World Economic Forum at Davos and re-emphasising on Alibaba’s mission to conquer the Internet space across the globe, there are investors who are awaiting the results to be out and are having innumerable expectations from the company. Let’s dive into the financial playbook of Alibaba and decipher what the analyst expectations are and what could be the major elements brought forward in the earnings call.
The lofty expectations are here
The Street is expecting the Chinese firm to report revenue of $4.44 billion and net income of $1.83 billion or $0.75 a share in the quarter which will see a release before the market opens for the day. Since Alibaba stock has already surged 50% after its launch at an IPO price of $68, all eyes are glued to the earnings release. Also in the past quarter the firm gave a remarkable performance with top-line having improved 54% year-over-year with gross monetization value having expanded 49% compared to the same quarter a year back.
Analysts estimate that the company could be able to deliver 6% improvement in GAAP earnings and at least 43.5% growth rate in gross merchandise volume revenue (GMV) in the quarter. Meanwhile, Stifel analysts have estimated that Alibaba would probably report non-GAAP earnings at $0.81 a share, higher than $0.75 a share as per the consensus estimate. Its revenue could reach a level of $4.605 billion, higher than the $4.44 billion consensus estimate. The set of analysts have also predicted that the retail marketplace in China might achieve $127.7 billion in GMV this year.
Gross monetization rates will be monitored
The key metric that will be monitored by analysts during the Thursday’s earnings release would be the monetization rates especially that for mobile users. The proportion of mobile shoppers has also increased on Alibaba’s platforms, and was close to 36% of the total GMV in the past quarter. This steep shift of buyers moving from conventional mode of shopping to mobile shopping has led to an uneven uptick in the monetization rates. In fact, it is estimated that the mobile monetization rates would surge past 2% in this quarter, while the PC monetization rates are likely to stay flat.
So, the quarter’s monetization rates would speak abound on the growing popularity of Alibaba Group’s existing platforms- Taobao (C2C) and Tmall (B2C), since both of these standalone platforms account for the bulk of the company’s GMV.
To conclude
Alibaba is set to post its earnings report card the second time after it became a public listed company last September. Analysts are excited on the future prospects of the online giant that saw the largest IPO in the U.S. history. Let’s stay tuned for the third quarter earnings report which will speak volumes on the financial stability of Alibaba and the future outlook which looks bright will get reinforced through the management’s tone. Thus, as being expected Alibaba might steal the entire show when it reports its third quarter earnings tomorrow and the stock movement would be interesting to watch after the market opens with the results in hand.
