To The Moon

My Thoughts on Alibaba's Revenue Miss

I was surprised to see Alibaba miss its fourth-quarter revenue expectations for FY2025, with revenue hitting RMB 236.45 billion compared to the anticipated RMB 237.91 billion. This 5% drop in stock value after the announcement caught my attention, especially given the challenging economic climate in China affecting consumer spending. However, I find the 279% year-on-year surge in net profit to RMB 12.382 billion quite intriguing, suggesting some strong underlying financial adjustments or one-time gains that I need to dig into further.

Alibaba

My Take on Whether It's a Buying Opportunity at $120

I am considering whether Alibaba's dip to $120 presents a buying opportunity. The company's cloud division showed an 18% revenue increase, driven by growing AI demand, which I see as a positive long-term sign. Despite the revenue miss, the significant profit growth and the stock's historical undervaluation compared to its growth potential make me lean towards viewing this as a potential bargain. However, I am cautious due to the broader economic uncertainties in China and will wait to see more stability before committing.

My View on Alibaba's Future Direction

I think Alibaba's direction during this pullback depends heavily on its ability to leverage its AI and cloud initiatives. The international commerce segment's growth, alongside efforts to improve the Taobao and Tmall platforms, suggests a strategic pivot that could pay off. I am hopeful that regulatory clarity and potential stimulus from Beijing might bolster consumer confidence, but I am also wary of ongoing competition from rivals like PDD Holdings $PDD Holdings Inc(PDD)$  . I will keep a close eye on these trends to gauge where Alibaba is heading.

Pinduoduo

My Assessment of Reaching $180

I wonder if Alibaba can touch the $180 mark as some market expectations suggest. With analysts pointing to a potential 26-35% upside based on current price targets around $167, I see it as possible if the company capitalizes on its AI-driven cloud growth and international markets. However, I recognize that macroeconomic challenges and trade tensions with the U.S. could cap this upside. I believe it's achievable in the long term with favorable conditions, but I am not fully convinced it will happen soon given the current headwinds.

My Comparison with Tencent's Performance

I noticed Tencent's $TENCENT(00700)$  strong performance as a contrast, with revenue reaching RMB 180.02 billion, up 13% year-over-year, and a 20% increase in gross profit to RMB 100.49 billion. Its operating profit also rose 18% to RMB 69.32 billion, which I find impressive. This makes me think Alibaba's challenges might be company-specific rather than a broader industry issue, prompting me to compare their strategies more closely, especially in gaming and cloud services.

Tencent

My Concerns About Market Sentiment

I am a bit concerned about the current market sentiment towards Alibaba $Alibaba(09988)$  , especially after this miss. The 5% drop suggests investor disappointment, and I worry that it could lead to further short-term volatility. I plan to review pre-market reactions tomorrow to better understand how sentiment might evolve and whether it aligns with my cautious optimism.

My Plan Moving Forward

I intend to monitor Alibaba's next earnings call and any updates on its cloud and AI initiatives. I also want to analyze how regulatory changes in China might impact its operations. With the stock at $120, I am tempted to buy but will hold off until I see more consistent positive signals, possibly waiting for a clearer trend over the next few weeks.

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