Revenue: $30.689 billion vs $30.336 billion expected (1.1% beat)
EPS (ADS): $1.75 vs $1.55 (12.9% beat)
Net Income: $3.395 billion vs $2.796 billion (21.4% beat)
Despite lockdowns in China during April and May, their YoY revenue only decreased by 1%. June appears to have been a good month, compensating for these two weak months, and this is expected to continue for the next quarter. Overall they are not good results, and the company's growth has really slowed down.
Bearish things:
- Cloud business has underperformed expectations, only growing 10% (compared to 12% in the first Q). Alibaba has lost market share in the cloud business. This is especially bad because the cloud business was the fastest growing part and was expected to follow AWS steps.
- More FUD is to come with delisting threats, and a primary listing in Hong Kong won't come until the end of the year. Without solid fundamentals, price might suffer.
- International expansion is slow (2% growth YoY) and is finding it difficult to find the correct route.
Bullish things:
- It is a solid business. It is a cash printing machine and it has a privileged position in the Asian market.
- Big investors like Charlie Munger back the stock and act as a hedge against delisting FUD.
- It is objectively undervalued due to the uncertainty and risks involved with the chinese government. High risk high reward opportunity.
What do you think about the stock? Are you surprised with these bad results throwing the company 5% up in the pre-market?
Disclaimer: I own 110 stocks at $88.99 each.
Leave a Reply