(Bloomberg) -- Alibaba Group Holding Ltd. faces a reality check as the e-commerce giant reports quarterly results on Thursday.
Investors will be laser focused on forward guidance, particularly after harsh Covid lockdowns in China during the second quarter put a drag on growth. Concerns about a slowing economy, an ongoing regulatory crackdown and heightened Sino-American tensions also complicates that outlook.
Shares of the tech firm have almost wiped out their rebound from a March low and are down 20% this year in Hong Kong, in line with a slump in the Hang Seng Tech Index. The stock rose as much as 5.8% on Thursday.
Here are three charts showing the roadblocks ahead for Alibaba’s shares:
Analysts expect Alibaba’s April-June sales to fall 0.9% from a year earlier, marking its first-ever quarterly revenue contraction. Some analysts are also focusing on cost cutting measures and investment spending plans in the company’s results.
Daiwa Capital Markets sees a larger sales reduction, as core commerce may “take a hit from supply chain disruptions in April-May,” analysts including John Choi wrote in note last month.
Alibaba’s more than 21% slump from a July high has put the stock near technically oversold territory. Shares have fallen below both 50-day and 100-day moving averages, which had been providing some support. A fresh regulatory penalty on past deals, a reported probe on data leaks and a soft macro economy have sent the stock tumbling. News that co-founder Jack Ma was also planning to cede control of Ant Group also created uncertainty.
Investors are trying to gauge how much Alibaba’s businesses can recover in the coming quarters after China started easing quarantine rules and vowed to support the economy. Geopolitical tensions and global recession worries have stalled a recent uptick in analysts’ profit projections, sending the company’s 12-month forward earnings estimate back toward 2019 levels.