2025 Q1 Earnings Preview (FY1Q26):
$Alibaba(BABA)$ Alibaba’s fiscal Q1 (calendar Q2 2025).
Food delivery business is performing well—Taobao Flash Sale hit a peak of 100 million orders in one day recently.
From early May to early August, Taobao app’s daily active users and total usage time jumped 19% and 30%, respectively.
Aggressive promotions are pressuring short-term profits—pre-tax profit expected to drop 15%.
Marketing spend expected to double to RMB 20B in July–September.
Cloud revenue should see an accelerated 22% YoY growth in Q1.
Total revenue up 3.9% YoY—slightly below consensus; profits much lower than expected.
Earnings Takeaway:
Margins are under pressure, but the market already expects this.
Food delivery losses are a short-term drag, but could drive traffic and revenue growth in the long run.
Losses expected to peak in July–September.
Cloud business is a potential bright spot.
Implied earnings move: 6.5%, range $112–$128.
Trading Strategy:
Major negatives are priced in and offset by positives, so a break below support is unlikely—ideal setup for selling puts.
Sell puts before earnings and close at the open on report day.
If you hold shares, you can sell out-of-the-money calls for extra yield/hedge.
Reference Strikes and Expiry:
Covered call strategy: $BABA 20250829 128.0 CALL$ (83% win rate)
Put selling strategy: $BABA 20250829 110.0 PUT$ (83% win rate)
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