Summary
Alibaba reports quarterly earnings on November 4th.
GMV and operating margin are key metrics.
With the rally into earnings, the market expects strong results.
Alibaba (NYSE:BABA) is set to release its first ever public earnings report on Tuesday, November 4th before market open. Analysts are expecting EPS of $0.45 on revenues of $2.64 billion.
The Chinese e-commerce company has been a rocket ship thus far, outperforming everyone's expectations. In Q2, Alibaba grew revenue by 46% year over year to $2.54 billion and operating income 27% year over year to $1.1 billion. Investors are looking for Alibaba to continue maintaining that type of momentum for Q3.
Below are some key metrics to look for:
GMV
Alibaba's revenue is basically a small slice (roughly 2.5%) of GMV. If GMV grows, Alibaba's revenue will grow.
Up to this point, GMV has grown by leaps and bounds. In Q2, Alibaba's GMV grew 45% year over year and 17% quarter over quarter to $81.6 billion.
Analyst expect GMV to grow at a similar pace this quarter.
Annual active buyers
The more annual active buyers, the greater GMV will likely be. In its most recent quarter, Alibaba had 279 million annual active buyers. Investors expect Alibaba to reach around 300 million or so this quarter.
Operating margin
Given its large size, Alibaba has an extraordinarily high operating margin of 43 percent that many investors don't think is sustainable. If Q3 margins increase, Alibaba will beat expectations.
Alibaba has been on an acquisition streak. The company made $7.5 billion in acquisitions and investments this year alone.If Alibaba can extend its e-commerce platforms to other large countries such as India or Brazil, Alibaba would be more than a China story.
Conclusion
With the rally into earnings, the market believes that there is a strong probability that Alibaba will beat expectations for Q3.
http://seekingalpha.com/article/2627655-alibaba-earnings-preview