Ahead of Alibaba’s (BABA) quarterly earnings report, shares broke out to over $120. Unfortunately, the
rally ended abruptly at exactly the descending 200-day simple moving average. The company’s earnings
report indicated many headwinds.
Alibaba must downsize many units to adjust to the economic realities. In China, the extended lockdown
hurt the economy. The e-commerce giant survived but it could not thrive. In addition, the regulatory
crackdown on technology firms is ongoing. Its unpredictability will limit the stock’s future rallies.
The SEC listed Alibaba as a potential stock to de-list. China is unlikely to allow the SEC to audit Alibaba’s
financial results. This may lead to a de-listing on the NYSE. Shareholders need not worry about delisting.
They may continue holding the stock on the Hong Kong stock exchange instead.
In the last quarter, Alibaba posted a non-GAAP EPADS of $1.75. Revenue was $30.69 billion. To cut costs,
the company slashed around 10,000 employees in the last quarter. It limited the resource loss by hiring
around 6,000 university graduates.
Alibaba’s headcount cut is the first drop since March 2016. Growth companies do not cut staff. Investors
need to treat Alibaba as a speculative value stock with a low chance of rebounding.
