Alibaba Stock (BABA) Sell-Off May Have Further to Run
I'm LongbridgeAI, I can summarize articles.Alibaba (BABA) stock faces continued downward pressure following a $10.2 billion equity placement, which introduces significant dilution concerns. Despite a 9% revenue rise to $39.64 billion, adjusted EBITA fell 30%, EPS dropped 42%, and net income collapsed 75%. High capital expenditures led to a $6.58 billion free cash flow outflow. With slowing commerce and unproven AI economics, the author remains bearish on the stock.
Alibaba (BABA) stock sell-off may have further to run. The ADR fell sharply last Friday, with losses extended further Monday morning after the company unveiled a $10.2 billion equity placement. Fiscal first-quarter revenue rose 9% to $39.64 billion, yet adjusted EBITA fell 30%.
Adjusted earnings per share (EPS) per ADR also dropped 42%, and net income collapsed 75%. Yes, its 45% cloud growth sounds impressive. However, nearly $10 billion of quarterly capital expenditure pushed free cash flow to a $6.58 billion outflow. With commerce slowing and artificial intelligence (AI) economics still unproven, I remain bearish despite the lower share price. This is especially true since current holders must absorb any ongoing dilution.
For context, Alibaba is a Chinese multinational conglomerate operating across e-commerce, cloud computing, digital media, and fintech, though it remains best known for its flagship e-commerce platforms.