BABA's August Print Tests Whether the Post-Earnings Rally Has Legs

BABA heads into its August 13 earnings report in materially different shape than it did two weeks ago — the stock survived its August 5 print, absorbed a modest 1.7% day-one dip, and has since extended its gains to $128.41, up 5% on the week and 31% over the past month.

Options positioning has normalised since the extreme call-skew flagged ahead of the last print. The put/call ratio has drifted back up to 0.68, essentially flat with its 20-day average of 0.676 and a z-score of just 0.33. That is a far cry from the nearly two-standard-deviation bullish lean recorded in late July. Investors are neither hedging aggressively nor pressing longs through the options market — positioning is balanced heading into Thursday's release. The borrow market tells a similar story of measured calm: cost to borrow has eased to 0.50%, down nearly 2% on the week, and availability has climbed back to around 101% — comfortably in the normal range after tightening toward 77% in late July. Short interest itself remains a sideshow at roughly 42.2 million shares, essentially unchanged for weeks.

The analyst debate centres on the gap between Alibaba's top-line momentum and its margin trajectory. Bulls point to accelerating cloud growth, a 5% revenue increase in the latest quarter (15% excluding disposed assets), and the 20% rise in Taobao daily active users driven by instant-commerce integration. Those who are more cautious focus on the cost side: China e-commerce EBITA margins were trimmed to 23% for the second half of FY26, EBITDA came in RMB 2 billion below consensus last quarter, and free cash flow turned negative on heavy quick-commerce and cloud infrastructure investment. Analysts who updated targets after the May print — including JP Morgan at $205 and Barclays at $195 — kept Overweight ratings, but those notes are now nearly three months old and predate the further 30%-plus move in the shares. The stock's EPS surprise factor rank sits at the 98th percentile, supporting the bull case on delivery, but the 90-day EPS momentum rank has slipped to 22, signalling that near-term estimate revisions have softened.

The closest peer cohort has broadly kept pace: PDD gained 3.6% on the week and PRX added 6.3%, suggesting the China-tech bid remains intact rather than being specific to Alibaba. That removes one possible cushion — if the sector were lagging, a beat could have driven outperformance on a relative basis. Instead, the stock goes in with the broader group already elevated.

Thursday's print is therefore less a test of whether Alibaba is growing and more a test of whether the pace of investment in quick commerce and cloud infrastructure has begun to translate into margin recovery — or whether the cost drag that rattled the stock in May is still deepening.