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Alibaba under pressure before 2015 Q2

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bull_bear_3 September 22, 2015 (Chinavestor.com) China's eCommerce giant Alibaba Group (NYSE:BABA) is going to report quarterly earnings on November 4- November 7, 2015. The pressure is on for the company to deliver sound profits because it reported "too good to be true" numbers a year ago.

 

To be precise, Alibaba reported revenues of RMB15,775 million in 2014 Q2 and net income of RMB12,404 million. That represented a profit margin of a staggering 78%!!! Conservative investors were reluctant to believe that such a huge company can maintain such a high profit margin. But the street didn't listen back then, sending shares of the company to $120 a year ago.

BABA_topbottom_2015Q1

And while revenues continued to grow at a relatively fast pace, earnings fell hard after a record 2014 Q2 report. One thing looks certain before quarterly earnings. Alibaba will not be able to duplicate such a high profitability as it did a year ago. This in turn keeps pressure on the stock price going forward.

Investors may recall that we have never been a big fan of Alibaba's IPO and massive valuation. The moment of truth is coming. We can see BABA share price all the way down to $30 within a year.



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