by Ian Harvey
February 01, 2019
Alibaba Group Holding Ltd (NYSE:BABA)
Alibaba reported quarterly profit far above market expectations and played down worries of Chinese economic slowdown and U.S. tariff effects, sending its shares up 6 percent. And “Armchair Trader Members” made an easy 100% profit. The potential profit now sits at 137%.
“Alibaba had another strong quarter of rapid growth. In particular, annual active consumers increased by 25 million to reach 601 million in the 12 months ended September 30, 2018,” said Daniel Zhang, Chief Executive Officer of Alibaba Group. “We generated synergies across our businesses, demonstrating the power of the Alibaba digital economy, which will be further showcased during our upcoming 11.11 Global Shopping Festival. Under our New Retail strategy, we are realizing our vision to enable renewed growth for traditional retailers through digitizing their store-based operations, powered by Alibaba’s technology and consumer insights.”
Before the report Alibaba had reached a bargain level after the Chinese economy lost momentum, and as President Trump’s tariffs continue to take a toll on it. Since June, Alibaba stock has tumbled about 30%, making its valuation quite reasonable, especially given BABA’s multiple businesses which are poised to benefit from strong, continuous growth trends.
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
PATIENCE PAYS OFF!
YOU NEED TO BE IN TO PROFIT!
The Details Presented Previously……..
The Chinese e-commerce goliath Alibaba Group Holding Ltd (NYSE:BABA), an online and mobile commerce company, has reached a bargain level after the Chinese economy lost momentum, as President Trump’s tariffs continue to take a toll on it. Since June, Alibaba stock has tumbled about 30%, making its valuation quite reasonable, especially given BABA’s multiple businesses which are poised to benefit from strong, continuous growth trends.
And now, with all eyes looking to the result of the vice-ministerial-level trade talks that were had on Monday and Tuesday in Beijing, it's not terribly surprising to see the beaten-down shares of this promising Chinese company to rally again on a favorable outcome.
BABA should continue to benefit from the strong, continuous megatrends of e-commerce and cloud computing. Meanwhile Wall Street analysts remain bullish on BABA, as their average price target on BABA stock is $213, representing upside of about 50% from the shares’ current levels.
** OPTION TRADE: Buy BABA APR 18 2019 165.000 CALL at approximately $4.70
The Result So Far………
Alibaba Group Holding
Limited reported third-quarter fiscal 2019 earnings
of $1.77 per share, surpassing the Consensus Estimate by 14 cents. Also,
earnings increased 15% year over year.
The company reported revenues of RMB117.27 billion ($17.06 billion), up 41% from the year-ago quarter. The revenue increase was driven by strength in the company’s China commerce retail business, the consolidation of Ele.me and Cainiao Network, as well as strong revenue growth at Alibaba Cloud.
However, its revenues missed the Consensus Estimate of $17.26 billion, its weakest pace since 2016; however, gross merchandise volume (GMV) - a key metric - grew at a solid 29 percent and the company's budding cloud business continued to show promise.
Alibaba witnessed sluggish demand for white appliances due to China’s waning real estate market. Moreover, demand for mobile phones declined too due to inadequate technological innovations.
"Concerns about trade tensions might affect sentiment, but Alibaba's exposure to the tangible effects of trade tariffs is small," Alibaba's executive vice-chairman, Joe Tsai, said on a post-earnings call on Wednesday.
"For our businesses in e-commerce, consumer services, entertainment and cloud computing, the primary growth driver is not exports but domestic consumption and corporate transformation."
Alibaba's founder Jack Ma has previously described the China-U.S. trade spat as the "most stupid thing in the world".
So, for “Armchair Trader Members”, who managed to execute this trade recommended by Stock Options Made Easy, and then exit yesterday; a profit of 100% was to be made.
Entering the option trade at a cost of $5.50 or less; and the price of the option reaching past the allocated sell mark of $11.00, reaching as high as $13.05 yesterday (137%); a tidy profit of 100% was made. Therefore, one options contract would provide a profit of $550.00.
ANOTHER WIN FOR THE WEEK!
AS ALWAYS THE DECISION IS YOURS!
Growth is expected to ease further this year; therefore anticipating the situation, Alibaba had lowered its revenue outlook for its financial year ending March even before the top sales season.
However, last week, Tsai noted that sales had ticked up in December, though demand for big-ticket items continued to slow.
"The healthy balance sheet of Chinese households and the increasing availability of credit will fuel consumption," Tsai said on Wednesday.
Chief Executive Daniel Zhang said the company remains optimistic, adding that younger buyers were driving sales.
Given signs of saturation in China's urban market, Alibaba has been trying to grow outside of its core e-commerce business to win new customers.
The company continued to invest heavily in cloud computing, artificial intelligence and online entertainment in the December quarter.
Therefore, you may wish to consider a NEW Trade……..
** OPTION TRADE: Buy BABA JUN 21 2019 180.000 CALL at approximately $9.50. Sell price is left to your own judgment.
As you would have by now realized, some of our trades are based on earnings predictions. This is not to say all trades recommended to members follow this pattern, but it is obvious that it did not apply at first in this case; but the earnings report certainly helped boost the profits when presented. During earnings season this strategy of predicting earnings has been very profitable.
Sometimes it is our approach to predict whether a company will beat or miss estimates, whether the stock will appreciate or depreciate as a result and what strategies investors and traders can use – such as found with the “Earnings Predictions Program”. This type of prediction is based on thorough investigation and fundamentally based research, and the results have been exceptional.
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!
Strategies to Consider……
When To Exit A Trade Based On Earnings?.....Read Article
"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.……continue reading this article……
Our proven track record says it all!!
Members of Stock Options Made Easy are provided with an extensive reason as to which direction a stock will move after earnings, followed up by a recommended options trade.
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Other Membership Options…….
If you interested in "Earnings Predictions" just click here……
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