To The Moon

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)