Earnings suggest to invest in Alibaba stock.
After companies release their earnings, it is the responsibility of an investor to read between the lines. As I always say, it is impossible to time the market correctly every time. There are bull and bear markets everywhere no matter which decade, year, or month. This is why investors should always keep some dry powder ready to buy some more shares of a strong company. After reading and dissecting several earnings of various companies, I can confidently recommend people to invest in Alibaba stock.
On February 1st, during premarket hours, Alibaba released their fiscal third quarterly earnings. While the company beat on revenue ($12.76 billion topping the $12.36 billion consensus), BABA missed on their Earnings Per Share by about 4 cents ($1.63. instead of $1.67).
The Alibaba cloud revenue number made me most excited. There was a 104% year-over-year cloud computing revenue growth. That is quite a staggering number. AliCloud, an Alibaba unit, is the largest cloud infrastructure data center in China. While cloud computing only generates $553 million of revenue for the company, I can only imagine how huge this number will be in several years. Do not forget that China has a growth in the middle class like no other country. The Alibaba cloud revenue will be huge one day. This is why I would invest in Alibaba stock.
BABA stock went down almost 6%. This was due to Alibaba’s Singles Day spending and a miss in earnings per share. In my opinion, market makers were trying to buy the stock cheaper by helping investors to panic and sell their shares. Companies like Apple, Amazon, and Alibaba should not be sold for cheap.
Another valuable information I took from the Alibaba earnings was that they boosted their 2018 revenue guidance. Their sales growth was going to be between 55% and 56%. Chief Executive Officer of Alibaba Group Daniel Zhang said: “Alibaba had another great quarter driven by the continued strength of the Chinese consumer and the wide and innovative range of services we provide for merchants and consumers.” I can only imagine how strong this company will become in the future.