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COVID-19 Uncertainties Vitiated Earnings Beats

ALT Perspective profile picture
ALT Perspective


  • While China is now battle-hardened against the coronavirus, others are beginning to panic.
  • Companies ranging from Apple to Starbucks, Alibaba's partner, are signaling improved operating conditions in China.
  • Despite the doom and gloom, Chinese indices are in the positive. On the contrary, the week's plunge in U.S. stocks sent the relevant indices deep in the red for February.
  • Baidu's stellar Q4 2019 results had been overshadowed by a weak forward guidance and a challenging macro environment impacting advertising revenue.
  • I explain why I deemed iQIYI's sell-off as undeserving despite an unappealing Q1 2020 guidance.

By ALT Perspective

While China is now battle-hardened against the coronavirus, others are beginning to panic. The past week has seen global stock markets rocked by the coronavirus outbreak. After being largely viewed as a China issue in the past month, the rapid rise in new COVID-19 cases outside of China has led to fears that the epidemic could escalate into a pandemic. South Korea alone reported more new cases on Thursday and Friday than China did and COVID-19 is now present in 50 countries.

The world squandered the ample time to prepare for the spread of COVID-19

China has been much-maligned for being slow and not taking early actions to contain the infections. Many countries have ample warnings (more than a month!) about the possibility of the coronavirus spreading globally but it seems they are still ill-prepared or have been complacent about their ability to contain COVID-19.

The blessing in disguise for China is that it has by now adapted to the impact of lockdowns and logistical challenges, even as other countries are scrambling to come up with contingency measures. Chinese companies have promptly adopted remote working and online services on a wide scale to cope with the problem of staff being stuck at home. There was a ten-fold jump in the number of daily active users for Corporate WeChat, a 'Mini Program' embedded within the ubiquitous all-in-one messaging app operated by Tencent Holdings (OTCPK:TCEHY)(OTCPK:TCTZF).

month-on-month growth of daily active users of WeChat Mini programs

Source: CICC, Tencent, KraneShares

Furthermore, China is on the path of recovery. Companies ranging from Starbucks (SBUX) and Apple (AAPL) are signaling improved operating conditions. Starbucks CEO Kevin Johnson stated in a letter to employees on Thursday that 85 percent of its retail outlets in China have reopened. The global coffee chain, together with other food and beverage (F&B) operators like Yum China's (

This article was written by

ALT Perspective profile picture
I am honored to have been categorized as a 5-Star financial expert and ranked among the top 2% of financial bloggers on TipRanks in 2017/18. For a period, I was among the top 3 “Opinion Leaders” for Insider Ownership and Services, as well as top 5 for Long Ideas and Fund Holdings. I am an avid reader of market news and company publications with the aim of improving my investment acumen. I enjoy expressing my findings and opinions through writings. My appreciation and understanding of business strategies improved to a whole new level since completing an MBA (Distinction) from a FT100 MBA school. I have worked in companies with businesses that span multiple industries, according me with the exposure to a myriad of sectors.Check out my Author's Picks and over 190 Editor's Picks, among the highest in Seeking Alpha, if not the most.

Analyst’s Disclosure: I am/we are long BABA, BIDU, JD, NTES, TCEHY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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