Alibaba Group (BABA) is scheduled to report results of its third fiscal quarter of FY22 before the U.S. market opens on Thursday, February 24, and will hold a conference call to discuss the results at 7:30 a.m. U.S. Eastern Time.

What to watch for:

1. WALL STREET CONTINUES TO GET LESS BULLISH: On November 18 of last year, the Chinese e-commerce giant reported Q2 adjusted earnings per share and revenue that missed consensus forecasts and revised its fiscal year 2022 revenue guidance. Alibaba now expects fiscal year 2022 revenue to grow 20% to 23% year-over-year, the company stated.

"This quarter, Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization, and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future. Our global annual active consumers across the Alibaba Ecosystem reached approximately 1.24 billion, with a quarterly net increase of 62 million consumers, and we are on track to achieve our longer-term target of serving two billion consumers globally," said Daniel Zhang, Chairman and CEO of Alibaba Group, at that time.

The next day, Citi analyst Alicia Yap lowered the firm's price target on Alibaba to $234 from $240. Following a substantial slowdown of National Bureau of Statistics retail data for the two months leading into the report, it was not surprising that Alibaba "printed a missed quarter," Yap said at the time. More recently, on January 10, Yap lowered the firm's price target on Alibaba to $216 from $234 and kept a Buy rating on the shares. The analyst reduced fiscal Q3 and out year estimates for Alibaba citing the "challenging" macro environment. The analyst expects a further softening in consumption demand and notes the "lackluster" Singles Day gross merchandise volume growth as well as the sharp deceleration of November retail sales data.

On November 24, Argus analyst Jim Kelleher downgraded Alibaba to Hold from Buy. The company is facing lower domestic consumption spending and increased competition, which is slowing growth in its core business, the analyst warned investors. Kelleher further stated that as China government cements its power, Alibaba is hindered by the "deteriorating environment" for large-cap tech names in the county, adding that a Hold rating is appropriate until he sees a "clearer path" to stronger sales and earnings.

Later that week, Goldman Sachs analyst Piyush Mubayi removed Alibaba from his firm's Conviction List but kept a Buy rating on the shares. At the time when retail spending slows down and competitive intensity levels up, Alibaba has been increasing its investments on both defensive and offensive strategies, the analyst noted. Mubayi expects revenue growth to decelerate to 13% and 16% in Q3 and Q4, respectively. Mubayi added that he was constructive on Alibaba on its "extreme valuation."

In late December, Atlantic Equities analyst James Cordwell downgraded Alibaba to Neutral from Overweight with a price target of $140, down from $185. While the stock is "inexpensive," the plans detailed at the company's investor event that month provided him little confidence that Taobao and Tmall's performance will improve near-term, Cordwell told investors. Further, management's commitment to "ongoing aggressive investment" had left the analyst less optimistic regarding renewed capital allocation discipline. While external capital raising for some divisions "could admittedly close some of the valuation disconnect," short of an AliCloud spin such developments "would only be modest catalysts," argued Cordwell.

2. REGULATORY HEADLINES: Since its last quarterly report, some headlines regarding regulatory issues or potential issues for Alibaba have included:

• Alibaba's cloud unit probed by the U.S. over national security risks, Reuters says
• Alibaba, Tencent e-commerce sites included on "notorious markets" list, WSJ says
• China tech stocks suffer worst two-day fall since July amid concerns of additional crackdown, Bloomberg says

3. SOFTBANK DENIES INVOLVEMENT IN ALIBABA SHARE REGISTRATION: Citi's Alicia Yap told investors in a research note on February 7 that Alibaba filed a Form F-6 on February 4 to register one billion American depository shares to accommodate the issuance of additional ADS upon the deposit of ordinary shares by current holders who had indicated to the company. While the ADS registration does not indicate new equity issuance, it allows holders of ordinary shares, especially those shares that have never been registered with SEC, to have flexibility to sell their shares in ADS rather than as ordinary shares in Hong Kong, said Yap. The analyst believed a portion of the new registration could suggest future new shares to be issued pursuant to the employee equity incentive plan, but also said it might suggest potential selling intention by Softbank (SFTBY) since it still owns 5.39B ordinary shares of Alibaba stock.

Subsequently, SoftBank denied involvement in Alibaba's filing of an additional one billion American depositary shares with the SEC, Bloomberg's Gearoid Reidy and Min Jeong Lee reported. Alibaba's filing triggered analyst speculation that SoftBank might look to dispose of some of its shares, but SoftBank executives told analysts during a private post-results briefing that they weren't responsible for the share registration. "The registration of the ADR conversion facility, including its size, is not tied to any specific future transaction by SBG," SoftBank said in an emailed statement, the news service noted.

4. CONSENSUS: In terms of overall results for the quarter ended December 31, 2021, analysts are calling for Alibaba to report total revenue of $38.66B. The consensus Q3 earnings forecast stands at $2.55 per share. For the March-end quarter, analysts' consensus currently calls for revenue of $33.29B and for Alibaba to post a profit of $1.45 per share, according to data from Bloomberg.