ETFs in Spotlight as Alibaba Misses on Q2 Earnings Despite Higher Revenues

Core Insights - Alibaba Group's shares increased by 0.4% following mixed Q2 fiscal 2026 results, with revenue growth but a decline in profitability [1] - The company faces significant competition in the global e-commerce market, which may limit investor interest despite the recent share price uptick [1] - A 78% year-over-year decline in adjusted EBITDA raises concerns for potential investors, although this is attributed to strategic investments rather than operational inefficiencies [2] Financial Performance - Alibaba's adjusted earnings were 61 cents per ADS, missing the Zacks Consensus Estimate by 7.6% and down 71% year over year [6] - Revenues reached $34.8 billion, exceeding the Zacks Consensus Estimate by 1.09% and increasing by 5% year over year [6] - Revenue growth was driven by the Cloud Intelligence Group and domestic e-commerce, while investments in quick commerce pressured margins [7] Segment Analysis - The Alibaba China E-commerce Group generated revenues of $18.6 billion, a 16% increase year over year [8] - The core e-commerce vertical reported revenues of $14.5 billion, up 9% from the previous year [8] - The International Digital Commerce Group's revenues grew by 10% year over year to $4.6 billion [8] Cash Flow and Share Repurchase - Cash from operations was $1.4 billion, down 68% from the prior year due to increased investments [8] - The company repurchased $1.3 billion worth of shares, resulting in a 5% net reduction in total shares outstanding year to date [9] E-commerce Market Outlook - The global e-commerce market is projected to reach $6.42 trillion in 2025 and $7.89 trillion by 2028, indicating strong growth potential [3] Investment Strategy - For investors seeking exposure to e-commerce growth while mitigating risks associated with Alibaba, ETFs with significant BABA exposure may be a prudent option [4] ETF Performance - Invesco Golden Dragon China ETF (PGJ) has a NAV of $29.85, with Alibaba holding 9.47% of the fund and a year-to-date gain of 17% [10] - ProShares Online Retail ETF (ONLN) has a NAV of $59.11, with Alibaba at 11.74% weightage and a year-to-date surge of 32.7% [12] - CoreValues Alpha Greater China Growth ETF (CGRO) has a NAV of $5.49 million, with Alibaba at 10.23% weightage and a year-to-date increase of 20.5% [13]