Alibaba Presented Moderately Downbeat Results Showing Some Improvement, but Market Sentiment Weighs

Alibaba (BABA) stock fell 4.61% in pre-market trading on Wednesday February 7, after Q3 revenue fell short of expectations as investors digested a $25 billion increase in its share buyback program. Alibaba, once China's top contender to become a trillion-dollar company, faces competition from rivals such as PDD (PDD). Additionally, geopolitical tensions between the United States and the PRC remain, putting further pressure on the potential for economic recovery. Chinese stocks have significantly underperformed certain other MSCI indexes over the past two years.

Non-GAAP American Depositary Share (ADS) earnings decreased 2% YoY to RMB 18.97 ($2.67), beating expectations. Meanwhile, sales rose about 5% YoY to RMB 260.35 billion ($36.67 billion), beating expectations but falling short of analysts' expectations. Cloud Intelligence, which develops AI models, reported sales of 28.07 billion yuan (approximately $3.95 billion), an increase of 3% YoY. BABA’s valuations, hence, remain elevated to get into the stock right now.