Alibaba will release its Q1 2025 financial results before the US market open on August 15. According to market consensus, Alibaba is expected to achieve revenue of 247.451 billion yuan in the latest quarter, an increase of 5.68% year-on-year, and expected EPS of 12.19 yuan, a decrease of 8.34% year-on-year.

Institutions generally bullish on Alibaba's performance this time, with impressive achievements during the 618 promotion period, and positive GMV trend; meanwhile, with the launch of full-site promotion in the second half of the fiscal year, the monetization rate will rebound. By department, according to Guosen Securities, Tmall International/local life/Cainiao/Cloud Intelligence revenue growth in this quarter is expected to be 45%/30%/18%/5% respectively.

GMV and monetization rate are expected to improve.

Among them, the highlight of Alibaba's financial report will focus on GMV and monetization rate. Institutions predict that GMV in this quarter will increase by about 9% year-on-year. Against the background of online retail consumption by residents that is continuously recovering, Alibaba's strategic direction of "scale and market share as the primary goal" and continuous investment in price, content and user experience narrow the gap between Tmall GMV growth rate and large-cap, and stabilize market share.

At the same time, Tmall performed well during the 618 promotion period, achieving double-digit GMV growth, while the growth rate of content e-commerce like Douyin slowed significantly, and consumers flowed back to the shelves of e-commerce, providing important growth momentum for this season's GMV. In addition, several major favorable factors converged, and Alibaba's monetization rate is also expected to continue to improve. First of all, on April 16, Ali Mama launched full-site promotion. With the full use of this ad tool targeting small and medium-sized merchants, the trading volume of small and medium-sized seller stores will be comprehensively increased, which may become the key engine for the growth of the Tmall ecosystem.

Looking to the future, in the end of June, AliExpress reached a cooperation with Magalu, and Alibaba will collect commissions on products sold on Magalu; in September, Tmall's new rules will be officially implemented, and a basic software service fee of 0.6% will be charged per order, these new measures will be strong promoters of Alibaba's monetization rate.

Is there anything else worth noting? Previously, Tmall Group, which failed to stand out in the price war, launched a comprehensive strategic adjustment. At the same time as the official announcement of "refund only" loosening, Taobao also announced the solicitation of opinions on the "Basic Software Service Fee Rules for Taobao Sellers". That is, as mentioned above, from September 1st, Taobao and Tmall will begin to charge a "basic software service fee" of 0.6% for orders with transaction status "transaction successful" (i.e. buyer completes confirmation of receipt) on the platform.

In fact, market news in July this year said that Taobao weakened its absolute low-price strategy. At the earnings conference in May this year, Alibaba Group CEO Wu Yongming also said that improving product competitiveness, efficiency, customer service and consumption experience, thereby driving GMV growth and user consumption frequency, is the top priority this year.

This strategic adjustment has become a focus of attention for Alibaba. Previously, multiple institutions were very optimistic about the contribution of Tmall's new rules to Alibaba's revenue. Deutsche Bank stated that the new monetization policy will bring Alibaba an incremental revenue of RMB 21.7 billion (or 2%) in the latest fiscal year and a considerable profit of RMB 13 billion (i.e. 8%). Citi believes that Alibaba's growth prospects will continue to improve under this measure, and gives the stock a target price of $122.

In addition, the dual primary listings, inclusion in the HK stock connect, and dynamic buybacks will be the focus of attention for Alibaba in the future. Jefferies pointed out that Alibaba will usher in more catalysts for stock price appreciation. The bank expects that after Alibaba completes its dual-primary listing on August 24, there will be a potential opportunity to be included in the “HK Stock Connect” on September 24; in addition, the company has repurchased US$10.6 billion in shares in the first half of the fiscal year, with a remaining repurchase quota of US$26.1 billion, and buyback progress will continue to boost investor confidence.

How have the stock prices performed during previous earnings seasons? According to Market Chameleon, during the past 12 quarters, Alibaba had a higher probability of falling on the day of the earnings release, about 67%, with an average price change of ±5.8%, a maximum decline of -11.1%, and a maximum increase of +14.8%.

Currently, the implied volatility of Alibaba is ±5.8%, indicating the options market is betting that its daily change in performance is up to ±5.8%. By comparison, the average post-earnings stock price change for Alibaba in the previous four quarters was ±6.4%, indicating that current option values are slightly undervalued. From the skewness of the option volatility, the market is slightly bearish on Alibaba.

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From the skewness of option volatility, the market sentiment towards Alibaba is slightly bearish.

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