TLDR: The SSE Index, a barometer for the Chinese stock market, saw a noteworthy performance recently, climbing to 2,829.70, marking a 1.44% increase in a single day, contrasting its 12.88% decline over the past year.
China is presently confronting a trio of formidable economic adversities: persistent deflationary pressures, a slump in exports, and an intensifying real estate dilemma. The International Monetary Fund (IMF) has cast a somewhat somber projection, anticipating economic growth to decelerate to 4.6% this year from 5.2% in 2023, amidst an aging population and climbing unemployment rates.
Alibaba Group's Q3 earnings did little to assuage investor concerns. Despite efforts to bolster investor confidence through a $25 billion share repurchase program, Alibaba's net income plummeted by 77% year over year, primarily due to mark-to-market losses on equity investments.
This downturn is exacerbated by Alibaba's core online retail platforms, Taobao and Tmall, which reported a mere 2% increase in revenue year over year, signaling weak consumer spending and economic challenges in China.
The sluggish growth in Alibaba's e-commerce operations can also be attributed to fierce competition from PDD, which recently surpassed Alibaba in market value.
Alibaba's stock remains under pressure, underscoring investor skepticism despite seemingly attractive value-investing metrics. The persistent decline in Alibaba's stock value, unaffected by the substantial share buyback program, highlights the enduring challenges and the perception of Alibaba as a potential value trap amidst ongoing economic and competitive pressures in China.
Here is the historical performance of Alibaba's peers after previous earnings misses of -$0.02, sorted by their 1-month performance:
In the last quarter, Expedia achieved revenues of $3.93 billion, marking an 8.6% year-on-year increase and surpassing analyst expectations. For this quarter, analysts anticipate a 9.9% year-on-year revenue growth, totaling $2.88 billion, with adjusted earnings expected at $1.70 per share.
This represents a slowdown from last year's 14.9% revenue increase in the same quarter. Analysts have largely maintained their forecasts over the last thirty days, indicating expectations for the company to continue its current trajectory.
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In the 9 past occurrences when Pinduoduo's 1M Realized Volatility reached a recent low, analysis from Toggle indicated a pattern of a median upward movement in the stock price over the following six months.
PDD could rise in price relative to other Chinese e-commerce stocks due to its unique social shopping model, which encourages group buying at lower prices, potentially attracting a larger user base. Innovations in agriculture and rural e-commerce could also set PDD apart by tapping into less penetrated markets.