Investors remain hopeful that Alibaba, China's largest e-commerce giant, will eventually witness a turnaround in its fortunes, despite a 40% drop in 2022 share price and a lack of sell calls from Wall Street analysts.

The put-to-call ratio for Alibaba's US stock has dropped to near-record lows, indicating that investors are reluctant to purchase bearish contracts that profit from additional losses. 

Following its first-ever decline in revenue during the previous quarter, Bloomberg reported that the tech company is anticipated to report a return to sales increase when it announces results on Thursday, Nov. 17.

Even though investors who bought the downturn in China tech stocks over the last year have lost money on many occasions, faith is increasing that the worst of the private-sector crackdown is over. 

Beijing's plans to loosen a lot of virus restrictions, which is a big change away from Covid Zero policy, and a goal to save the country's struggling property market are also good signs.

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Recovery After a Decline

For the quarter, analysts predict a 4.3% growth in sales and the first profit boost for Alibaba since 2019. Along with projections on more share buybacks, investors will be looking for news on the company's efforts to cut costs.

UOB Kay Hian analyst Julia Pan speculated that the business's net income would exceed expectations because of the cost-cutting efforts and the fact that the company has halted significant expenditures in some ventures. 

She continued by saying that once the new quarantine regulations are implemented the following month, business for the company should improve.

There are even other positive signs for the consumption recovery, according to Bloomberg. 

Alibaba claimed gross merchandise value was in line with last year's performance amid Covid setbacks. Still, the company did not publish detailed sales data for its trademark Singles' Day shopping holiday for the first time. 

Lockdowns have hurt ad sales a lot over the past year, but as the economy gets better thanks to reopening measures, they may finally start to go up again.

Nicholas Yeo, head of China equities at abrdn, stated that despite a more adverse economic backdrop, they anticipate this year's consumers to be "exuberant." 

"Disposable incomes are climbing across the nation and this affluence is driving growth in aspirational areas."

Growth for E-commerce Tech Firms 

Indeed, Alibaba confronts more systemic issues since the sector as a whole is seen to have reached the end of its rapid expansion phase.

Investors are nervous about how new US chip export laws would affect the company's cloud business. It is anticipated that China will abandon Covid Zero policy completely.

Nonetheless, optimism is rising, and not only concerning Alibaba. 

Options data also shows, via Bloomberg, that pessimistic bets are decreasing for JD.com and Tencent, two of the company's competitors. Analysts anticipate profits that align with, or perhaps better than, projections.

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This article is owned by Tech Times

Written by Trisha Kae Andrada