Alibaba share price tumbled 11% towards two-year-low after big earning miss

China’s top tech giant Alibaba experienced one of its worst days in US share market. Its share price (NYSE: BABA) dropped harshly by 11% from $161, the day before, to $143 when market closed on Thursday.

Even through a 4.07% drop before the report day showing Alibaba Group Holding Ltd (All Sessions) investors had little expectation for the Chinese ecommerce giant given all the bumpy hurdles that it had gone through, the disappointing Q2 earnings still dragged the BABA’s share price down much further.

What does the Q2 earnings show?

Based on Alibaba’s Q2 earnings, the ecommerce giant reported non-GAAP earnings per share (EPS) of $1.74, missing the estimate of $1.93, representing a shocking 37.7% decline compared to the same period last year. Revenue was also reported as a miss, totalling $31.15 billion as opposed to the estimated $32.05 billion.

Annual active consumer globally is the only beat that has reached approximately 1.24 billion, more than four-times the size of Amazon (300 million), with a quarterly net increase of 62 million consumers.

Alibaba earnings results



Reported value

Analysts prediction

Adjusted EPS Miss RMB 11.20 RMB 12.11
Revenue Miss RMB 200.7B RMB 205.7B
Annual active consumers in China Beat 953 M 846.6 M

Source: VisibleAlpha

Quarterly earnings surprise amoune

Fiscal quarter end

Date reported

Earnings per share

Consensus EPS forecast

% Surprise

September 2021





June 2021





March 2021





December 2020





September 2020






Why is the market disappointing?

Fundamentally, investors are concerned about the company’s long-term profitability. Although the group’s revenue still grew by 29% year-over-year, its adjusted EBITA margin for the most profitable sector ‘commerce’ decreased from 35% in the quarter ending 30 September 2020 to 19% a year after, shrinking by a worrying 45%. Alibaba didn’t deny thinner margin in the report, stating “we expect that our commerce adjusted EBITA margin will continue to be affected by the pace of our investment in key strategic areas”.

Actually, Alibaba's operating margin has been declining for some time. In 2014, the company’s margin sat at around 45% when their active user size was only one-fourth of what it is today. This means the ecommerce giant’s margin has been reducing by an average of 12% every year.

Adjusted EBITA and adjusted EBITA margin by segments (in millions, except percentages)














Cloud computing(1)






Digital media and entertainment






Innovation initiatives and others(1)






Source: Alibaba

On the other hand, Alibaba’s challenge is not just a matter of fundamental valuation, but a matter of risks. As the open window into the impact of Beijing’s regulatory curbs, Alibaba coincided other Chinese stocks listed in the U.S. are reporting similar troubling results this quarter. For example, Tencent last week reported its slowest revenue growth since 2004, fuelled with the growing concern over the company’s long-term picture under the environment that was walloped by macroeconomic and regulatory turmoil.

Alibaba technical analysis

Over the past twelve months, Alibaba's shares have provided a total return of -37.1%, well below the US 500's total return of 29.9%.

From a technical standpoint, the freefall from this week has left a big gap between $146 to $160, which became the critical resistance level if the price is seeking higher in the near term. The candlestick is now sitting in the previous gap from October, with the support level at $139. If the bearish momentum stays, a further down to two-year-low at $130 may be in view.

Take your position on over 16,000 local and international shares via CFDs and trade it all seamlessly from the one account. Learn more about share CFDs with us, or open an account to get started today.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Introducing our best ever web platform

Enhance your CFD trading with the new IG Trading platform:

  • Quicker deals, with one-click execution from lists

  • Real-time updates, with news and Twitter feeds

  • Orders to part close, price change alerts, a dark theme and more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.