Alibaba (BABA) and JD.com (JD) Brace for Earnings – What To Expect

Chinese e-commerce giants Alibaba and JD.com are on the verge of disclosing their financial performance for the June quarter, and investors are watching closely. These results come at a time when the e-commerce industry is facing many challenges, including intense competition and changing consumer behaviour.

Alibaba is slated to publish its earnings report for the fiscal first quarter that ended in June. Analysts are forecasting a slight downturn in profitability, with adjusted earnings per share expected to decrease by 13.6% to 14.94 yuan.

The silver lining comes in the form of a projected revenue increase of 6%, which would take the total to 247.45 billion yuan. Alibaba has attempted to strengthen its market position by offering discounts and coupons, vying to remain competitive against companies such as PDD Holdings.

With a 6.3% gain in Alibaba's stock price on the NYSE (NYSE: BABA) since the start of 2024, the overall sentiment has been positive. After BABA's stock pulled back heavily in recent years, losing almost 75% from 2020 highs, the tide may be about to turn. Analysts have a low price target on the stock of $80, a high of $125, and a an average consensus mark of $110. With the BABA stock price now trading at $78.50 in the pre-market, the potential uplift to consensus represents more than 30%.

In parallel, JD.com is preparing to unveil its earnings for the second quarter, which also concluded in June. Projections for JD.com are more positive, with analysts expecting a 16% uptick in profit to 6.24 yuan per share and a modest 1% growth in revenue, totalling 291 billion yuan.

JD's stock price (NASDAQ: JD) have not enjoyed the best year on record, recording an 4.78% dip this year and a 28% fall over the past 12 months.

The landscape of China's e-commerce sector has proven challenging, with Deutsche Bank analysts citing fierce competition and flagging consumer demand as significant hurdles. The competitive climate was evident during this year’s “highly promotional” 618-store festival, which failed to meet usual performance metrics. JD.com is expected to report a low single-digit increase in gross merchandise value for the quarter, mirroring the overall trend observed in the Chinese e-commerce market.

As the market awaits these financial disclosures, the emphasis on consumer engagement and market share is more critical than ever for these e-commerce giants.