Alibaba Group Holding Limited

(New York Stock Exchange)
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Somewhat Bearish -45

Alibaba Stock Is Down Nearly 27% in 2026 as Earnings Keep Missing Estimates. Hereโ€™s What the Next Report Has to Show

Analyst downgrade Earnings report Lawsuit AI-generated analysis

๐Ÿ“‰ BABA shares are down nearly 27% in 2026, closing at $107.74 after missing adjusted EPS for five consecutive reports.

๐Ÿ“‰ Analysts have trimmed fiscal 2027 revenue forecasts by roughly 2.5%, dropping the consensus from RMB 1.15 trillion to RMB 1.12 trillion.

๐Ÿ’ฐ In the June quarter, adjusted EPS of RMB 8.52 missed consensus by 21% while TIKR-basis EBITDA fell 14.41% year over year.

๐Ÿ›’ E-commerce revenue grew 4% to RMB 205.9 billion, but customer management revenue declined 7% despite quick commerce surging 45%.

๐Ÿ’ป CFO Toby Xu attributed the drop in adjusted EBITDA primarily to heavy technology investments that are currently dragging on profits.

๐Ÿš€ Consensus expects September-quarter EBITDA to reach around RMB 40 billion, representing a 129% increase from the prior year.

๐Ÿ’ธ TIKR models project negative levered free cash flow of approximately RMB 16 billion for the next twelve months.

๐Ÿ“ˆ The company plans to narrow AI Labs losses as model training and Qwen app marketing become more efficient.

โš–๏ธ Chairman Joe Tsai and CEO Eddie Wu bought HK 120 million in shares, while CFO Toby Xu sold $1.41 million worth of stock.

๐Ÿ”ฎ A mid-case valuation model values Alibaba at around $216 by March 2031, implying a potential total return of roughly 101%.

Bullish Signals
  • Quick commerce revenue grew 45% to RMB 53.3 billion in the June quarter, demonstrating strong growth in high-velocity retail segments.
  • E-commerce group revenue rose 4% year-over-year to RMB 205.9 billion, maintaining core business momentum despite headwinds.
  • Consensus expects September-quarter EBITDA to surge to around RMB 40 billion, up roughly 129% from the prior year.
  • The company's AI Labs and Applications segment posted RMB 13.9 billion in adjusted EBITDA loss, which management expects to narrow as efficiency improves.
  • Chairman Joe Tsai and CEO Eddie Wu purchased a combined HK 120 million of shares on the open market in August, signaling confidence.
Risk Factors
  • The company has missed consensus adjusted EPS in each of its last five reports, creating a significant earnings miss streak.
  • Analysts have trimmed fiscal 2027 revenue forecasts by about 2.5%, reducing the consensus from RMB 1.15 trillion to RMB 1.12 trillion.
  • Adjusted EBITDA fell 14.41% year over year in the June quarter, primarily due to heavy technology investments cited by CFO Toby Xu.
  • Customer management revenue fell 7% in the June quarter, with growth of only 1% excluding contra revenue impacts from new business programs.
  • TIKR models project negative levered free cash flow of approximately RMB 16 billion for the next twelve months, delaying positive FCF until fiscal 2028.
  • The August placement of 710 million new shares dilutes future earnings per share by about 3.7% of the total share count.
Full Analysis
Alibaba Group Holding Limited (BABA) shares have declined significantly, dropping nearly 27% in 2026 and closing at $107.74 as of late September. The company has missed consensus adjusted earnings per share for five consecutive reports, prompting analysts to trim revenue forecasts for fiscal 2027 by approximately 2.5%. This downward revision reflects growing concerns that the company's aggressive technology investments are outpacing its ability to generate sufficient profit growth in its core e-commerce segment. In the June quarter, Alibaba reported an adjusted EPS of RMB 8.52 per ADS, missing estimates by about 21%, while TIKR-basis EBITDA fell 14.41% year over year. Although revenue in the e-commerce group rose 4% and quick commerce surged 45%, customer management revenue contracted by 7%. CFO Toby Xu attributed the decline in adjusted EBITDA primarily to heavy technology investments, noting that current profit levels are insufficient to absorb these spending increases without external growth drivers. Looking ahead, the market expects a sharp rebound in EBITDA for the September quarter, with consensus estimates around RMB 40 billion, up roughly 129% from the prior year. However, analysts remain cautious about the company's free cash flow trajectory, with current models projecting negative levered free cash flow of approximately RMB 16 billion for the next twelve months. The upcoming September-quarter earnings report is viewed as a critical test to determine if Alibaba can end its miss streak and validate future growth assumptions.