Analysts Expect A Lot From Alibaba Group Holding’s (NYSE:BABA) First Earnings Report

417

By Joseph Carducci on November 3, 2014 Company

Alibaba Group Holding (NYSE:BABA) went public in 2013, in September to be more precise. The company is about to release its July to September quarter’s financial figures tomorrow morning, that is, Nov 04, 2014. It is important to note here that Alibaba Group Holding (NYSE:BABA) opened its first round of public offerings in New York and made a record IPO of $25 billion.

There are a few things that the investors and traders need to know before they make up their minds about investing in the respective company’s stocks in the market.

Many market researchers and analysts have started covering the stocks of the company, and a lot of them are of the opinion that the company will continue to see huge growth in its upcoming quarters. According to the Thomson Reuters estimates, the company is likely to report a net profit of around $1.16 billion for the July to September quarter. If compared with the yearly figures, the numbers are up by 45 percent.

As for the revenue forecast, the researchers expect the revenues to cross $2.61 billion. If the estimates are correct, the figures will be up by 45 percent on yearly basis.

The profit margin of Alibaba Group Holding (NYSE:BABA) is higher than the industry average and rival companies; however, the figures have dropped considerably since last year, the reason being that the company is expanding its e-commerce segment, and for that purpose it has spent huge sums on expanding its services on mobiles and tablets.

The operating margin of the company fell from 50.3 percent to 43.4 percent during the April to June quarter. Market researchers are expecting the company to introduce improvements in the e-commerce segment related to mobiles in order to derive more profit, for the mobile segment did not turn out to be as profitable as the desktop computer one.

Coming to the earnings guidance of the company, market analysts are expecting the company to release its earnings guidance this year. Investors and traders are of the view that the company will post strong figures in its profit outlook for the recent quarter, for the annual discount day (November 11) falls in the December quarter. For those of you who do not know what annual discount day is, it is the biggest event of the year organized by the company, which usually results in huge profits. Last year alone, the event generated around $5.8 billion deals in a matter of 24 hours.

The company collects most of its revenues from Tmall and Taobao, two of its online marketplaces. These markets give an opportunity to small merchants in case they want to sell something. Although the market does not charge fees or commissions but it generates money through add postings. Tmall is the site which usually hosts big brands including Nike, Apple and Blackberry, and the site gets a cut from each deal that the customers make with the company. Researchers are of the view that the site will add to Alibaba Group Holding’s (NYSE:BABA) growth and will improve the numbers further in the upcoming quarters.