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Is Alibaba a Buy After Earnings or Are More Struggles Looming?

By Neil Rozenbaum – Aug 10, 2021 at 11:47AM

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Regardless of how well the company is doing, it keeps getting hit from every direction...

In this video I will talk about the recent scandal that hit Alibaba (BABA 1.03%) and go over its recent earnings report. You can find the video below. 

Earnings highlights

In Q1 Alibaba reported revenue of $31.86 billion, a 34% year-over-year increase. Operating income was $4.7 billion, a big increase after last quarter, which was negative for the first time in years as a result of the antitrust probe in China. Annual active consumers across the Alibaba ecosystem reached 1.18 billion, including 912 million consumers in China. Cloud revenue was up 29% to $2.48 billion, though there has been a decline from one of the top customers. Alibaba's board also authorized a larger share repurchase program, going from $10 billion to $15 billion.

Now what

Regardless of how great Alibaba is, it seems as if the market is very careful with this stock. I talked about Alibaba's ecosystem and business flywheel a month ago, and although the stock has tremendous value, a lot of risks are attached to it. Yesterday, Alibaba got hit with a sexual assault scandal regarding one of the managers that worked there. The manager has now been fired. But it seems as if Alibaba can't catch a break; if it isn't the Chinese government's tech crackdown it's something else. Maybe this is the perfect time to buy shares of Alibaba, or maybe it's the beginning of the end for Chinese stocks trading on US stock exchanges. Only time will tell. 

For full insights do watch the video below. 

*Stock prices used were the closing prices of Aug. 9, 2021. The video was published on Aug. 10, 2021.

Neil Rozenbaum has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd. The Motley Fool has a disclosure policyNeil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Alibaba Group Stock Quote
Alibaba Group
$91.45 (1.03%) $0.93

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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