Alibaba Q2 earnings on deck: What to expect

Chinese e-commerce giant Alibaba (NYSE:BABA) is set to post second quarter results on Friday, before markets open.

Wall Street expects the company to post EPS of $2.05, implying a fall of 4.2%, while revenue is expected to rise 8% to $33.27 billion during the quarter.

Alibaba, once China’s best contender to become a trillion-dollar company, has been facing competition from rivals such as PDD (PDD) and JD.com (JD). Moreover, it has been facing pressure as consumers are limiting their spending amid a slow economy.

Earlier in August, Alibaba’s revenue grew 4% but missed Wall Street expectations. The company also posted a plunge in its profit during the quarter.

Still, Seeking Alpha analysts and Wall Street are bullish and consider the stock a Buy and above.

“Alibaba’s upcoming earnings will reveal the ability of the company to diversify its revenue base and move away from the core China e-commerce segment,” noted a recent Seeking Alpha analysis.

Investors will keep an eye on Alibaba’s cloud division and its international digital commerce arm.

The cloud and international segments of Alibaba are seen as “bright spots” for the Chinese tech giant going into the company’s third-quarter earnings report, research firm Baird said.

Seeking Alpha’s Quant rating is cautious and rated it a Hold, mostly dragged down by growth and valuation factor.

Over the last two years, Alibaba has beaten EPS estimates 88% of the time and has beaten revenue estimates 63% of the time.

Over the last three months, EPS estimates have seen 12 upward revisions and no downward revisions, while revenue estimates have seen 2 upward revisions versus 13 downward moves.