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Alibaba stock sinks after Q2 earnings miss

Yahoo Finance’s Akiko Fujita and Jared Blikre discuss Alibaba stock's plummet after its Q2 earnings miss.

Video transcript

AKIKO FUJITA: With the big earnings we got out today, quite a few to get through to, Jared. But let's start with Alibaba, because that stock is really getting pummeled in this session-- you see it down more than 10%. The company posted a revenue of $31.4 billion in their fiscal second quarter. That was a 29% growth year-on-year, but EPS declined 38% compared to the same period the last year. And the company cut its revenue guidance, saying it expects growth of 20% to 23%. That is down from the 30% growth forecast in May.

And, Jared, this is an interesting stock to watch as always, because Alibaba's scale and the size of this company really does act as a bit of a bellwether for what's happening within the Chinese market here. The company attributed the slowdown they saw to a slowdown in consumer spending as well as increasing competition from rivals. And remember, when you think about Q3, that's when we saw GDP slow down.

It grew at 4.9%, but certainly much slower than we anticipated. So this seems to point to what we've seen in the broader Chinese economy. Obviously, Alibaba also a big target of the broader tech crackdown that we've seen over in China. But it's an interesting contrast.

When we're talking about Alibaba to its closest rival JD.com, and I wonder if we can put up the stock chart here, because they did also report their earnings today. A very different story here, at least when you talk about the stock moves-- the company reported more than 25% jump in Q3 revenue. We're talking about $33.9 billion. They did report a loss in the quarter, $1.81 a share, but they did talk about annual active customer accounts rising 25%.

So, Jared, two big rivals, two big consumer plays or retail plays over in China, those stocks moving in the opposite direction in the session today.

JARED BLIKRE: That's right. And let's just check out the technicals here, because-- and JD.com, this is a year-to-date chart, and we can see almost back to break-even-- down only 2% year-to-date is not too bad for one of these Chinese stocks. And I do like the rounded bottom that we're forming right here. It's probably going to take a while to complete, but this is a log base.

And I think eventually the stock will find its footing. But Alibaba is a little bit of a different story. This stock is now down 37% year-to-date. And you're talking about all the pressures from the Chinese government. I mean, it was really Alibaba that kicked off the controversy last year when the plug was pulled on that Ant Financial IPO that was supposed to be one of the largest in history. And then also, Jack Ma went on the lam here.

So that was over a year ago. He's found now. But the stock really still-- I would say this is a pretty broken stock here. Now, I want to get to some earnings in the US. And here's our retail screen-- you can see a lot of green there. In the upper left is Macy's. That stock is up 18% today, up 224% year-to-date. And this is a stock that just won't quit here, really taking advantage of consumer spending.

They're expecting a really strong end to the quarter in the year, this final push that we have into the holiday season. And the CEO, Jeff Gennette, said in the report, the company is continuing to invest in positioning our company for long-term sustainable and profitable growth. And one of the ways they're doing that is by really doubling down on digital.

They're starting a new curated digital marketplace. There's a lot of excitement around this. That's going to expand the company's products in their existing categories and brands and introduce a range of new categories. And so they're going to use third party merchants who curate and sell their products on Macys.com and Bloomingdales.com-- almost sounds like Amazon.

And I should say, too, this is something that's been pressed by one of their activist investors. Jana Partner recently bought 1.5%. So Jana wants Macy's to develop their online business or e-commerce strategy and spin it off. Remains to be seen, but they seem to be executing right now quite well. Also want to take a look at Kohl's. Kohl's stock is up 7%-- you can see climbing towards the upper end of its range for 2019.

And their moves with Sephora, I think that's really one of the bottom lines here. It's really paying off. They have 200 already of these Sephoras installed in their shop. They have 400 coming next year, 250 in 2023. So that's going to be 850 overall. And in same-store sales, they're really attracting the traffic here-- that rose 15.5%, way above the 12.7% growth in estimates that were sampled by "Bloomberg," also increasing their full-year outlook. I think the bottom line here is a lot of these stores that we had kind of counted out over a year ago, not speaking for everybody here, are really climbing back and taking advantage of the current business environment.

AKIKO FUJITA: Yeah. I mean, Jared, when you talk about retail, so much of the story continues to be all about the online footprint. And Macy's, when you think about the earlier struggles, it really was about the retail not adapting to new consumer habits. I don't know if we can even call it new. We've all been shopping online for many, many years. But to your point, it looks like now that they've made this shift, things are moving in the right direction-- and the stock getting a big bump in the session there today.

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