Back to top
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
SoftBank Group Corp. Unsponsored ADR (SFTBY) - free report >>
We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
SoftBank Group Corp. Unsponsored ADR (SFTBY) - free report >>
Image: Bigstock
Alibaba (BABA) Stock is a Strong Sell Right Now. Here's Why
Today, SoftBank Group (SFTBY - Free Report) announced plans to sell $7.9 billion worth of Alibaba (BABA - Free Report) shares. The company is doing this in order to cut down its debt. Currently, SoftBank owns about 33% of Alibaba shares. After selling the stock, SoftBank will retain about a 28% ownership stake in the Chinese e-commerce giant. SoftBank hasn’t announced if it is bearish on BABA shares over the short term, but maybe it should be.
Alibaba stock has recently been downgraded to a Zacks Rank #5 (Strong Sell). Analysts have been revising their earnings expectations lower over the last month. These revisions are being driven by the poor earnings results from Alibaba’s quarterly earnings which were released on the 5th of May. Although the company beat sales estimates, EPS fell well below expectations. BABA posted quarterly EPS of $0.20, missing our consensus estimate of $0.38 by 47%. Alibaba shares have dropped by over 4% since SoftBank announced its plans to sell BABA stock.
Over the last month, 5 analysts have revised their earnings expectations for this quarter. Four of those analysts revised their EPS expectations downwards. As a result, our quarterly EPS consensus has moved lower, going from $0.45 to $0.39.
Over the last 60 days, 10 analysts have revised their fiscal year earnings expectations downwards for Alibaba. In this same time frame, no analysts have revised their estimates higher. As a result of the downward pressure from analysts, our EPS consensus for the current fiscal year has dropped significantly, going from $2.43 to $2.11.
Bottom Line:
Alibaba does not have a consistent track record when it comes to beating earnings expectations. On top of all this, earnings estimates are being revised lower for Alibaba. If the company continues to be inconsistent on the EPS front, it may not be long before its shares start trading below its $68 IPO price tag once again.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>