Financial Trading Blog
Stocks of the day 28/01/2015 – Alibaba Group/Amazon.com Inc/Google Inc
After a record breaking IPO alongside a similarly record breaking Single’s Day, Alibaba Group is in a strong position ahead of its Q3 2014 release. An IPO of $68 led to an actual open of $88.26 in September; 2014’s high saw a price of $119.96 in mid-November after a low of $83.31 in mid-October. The stock has stabilised just above the $100 mark, starting 2015 at $104.23, and currently trading at $102.87.
That astonishing Single’s Day, which saw $9.3 billion in sales in 24 hours, was the high point for Alibaba, and things have slowed down slightly since then. The company has begun to clash with Chinese regulators over the lax practices in regards to checking the products listed on its marketplaces, with items veering between shoddy replicas or actual illegal items. However, its Q2 release saw 38% year-on-year growth in Taobao and 28% in Tmall, and with these two marketplaces making up the majority of Alibaba’s gross monetization value, the company is on track for a positive report tomorrow. The company will also want to see growth in its mobile users, as this sector is becoming area of focus for investors; mobiles users jumped from 15% to 36% of the company’s GMV from 2013 to 2014, so progress with these numbers will be taken as a sign of strength. Analysts are expecting $4.45 billion revenue, with net income of $1.83 billion and earnings per share of $0.75.
Amazon.com’s year was significantly rockier than Alibaba’s, with a string of failures and embarrassments causing a rough year on the markets. Amazon’s share prices fell from $398.53 at the start of 2014 to $308.60 now; this fall including highs of $407.84 at the end of January and a low of $272.67 in October. Amazon has failed to beat market expectations for the past 6 quarters, so investors are likely to be tentative ahead of the company’s release on Thursday.
These quarterly disappointments were joined by the abject failure of the Amazon Fire Phone to make even the slightest dent on Android and Apple’s turf, whilst a dispute with publisher Hachette towards the end of the year did nothing to help the Amazon’s image as the Big Bad Bully stealing market share from smaller companies. However, it is not all doom and gloom for the retail giant: the company added 10 million new Prime users over the holiday season, and has seen big successes with its self-produced TV projects, allowing the company to become a legitimate rival not only to Netflix, but to normal US network television. Analysts have given a consensus revenue figure of $29.7 billion, alongside EPS of $0.17, and a gross margin of 28%; this comes with a caveat surrounding the impact of the strong dollar on the multitude on international interests Amazon has, as this factor has been a key issue this earnings season.
Finally, after a dismal release from Microsoft, and an astounding announcement from Apple, the pressure is on for Google to outperform these other two companies in the top 3 most valuable brands in the world. April 2014 saw a 2-1 stock split for the company that appears to not have been as successful as Apple’s similar 7-1 split. The company started the year at $1115.30, and peaked at $1228.81 in February; after the split Google hit a low of $491.04 in the New Year, after starting 2015 at $536.04, now trading at $525.45.
Similar to Amazon, Google has missed earnings expectations for the past 4 quarters. This issue was exacerbated by the unprecedented success of Apple’s iPhone 6, with Google’s Android phones suffering in the aftermath. Even its core service, the infamous Google search engine, is showing signs of wear and tear; Firefox has replaced Google with Yahoo as its default search engine, and the company’s contract with Apple’s Safari browser is coming to an end. This is joined by the fact that the rise of mobile enquiry apps that allow the user to bypass search engines entirely is beginning to take its toll on the company’s core service. Due to this, the expansion of Google’s other services, namely its Android operating system, its attempts at online video distribution and the advertising revenue that comes from this, and a rumoured move into wireless services, will be important areas for investors to watch before the success of Google’s Q4 2014 release can be assessed. With all this in mind, analysts are expecting $14.8 billion in revenue with earnings per share of $7.17.
After Apple briefly plugged the leaking ship that has been this US earnings season, Thursday looks set to be a key day for the health of the US markets, and there will be intense scrutiny on these three super-companies come release time tomorrow.
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