Alibaba Group Holding Ltd. is still in a tough spot as it approaches its Thursday morning earnings report, despite signs of easing regulatory pressures on Chinese internet companies.

Fears of a Chinese crackdown on powerful tech companies that list their shares in the U.S. have weighed on Alibaba’s stock BABA, -0.19% in recent months, but the Chinese government recently hinted at more support for the companies as well as some broader willingness to stimulate spending amid a slowing economy.

“While the devil is in the details, we view these moves as encouraging signs from a regime which over the last two years has increased scrutiny and enacted unfavorable policies towards some of its leading domestic tech companies,” wrote Truist Securities analyst Youssef Squali.

Still, Squali has questions about how much and how quickly government actions could help Alibaba. The company has seen slowing growth lately amid sluggish consumer spending trends in China, and that issue could be compounded by recent pandemic-fueled lockdowns in the country.

“It remains to be seen what actual measures the Chinese government decides to take to boost consumer spending in particular, and over what time frame,” he continued.

Mizuho analyst James Lee added that COVID-19 issues in China could “amplify” pressures on Chinese internet companies related to macroeconomic weakness.

“The strict COVID controls across the country, including lockdowns, have caused a meaningful disruption across all internet segments,” he wrote in a note to clients. “While we expect the policy to be fluid, we believe the risk is not structural, but a stumbling block to China’s economic recovery.”

On Alibaba in particular, Truist’s Squali worries that the company could be losing share in the Chinese e-commerce market. The company already has strong market share in the country and a “heavy reliance” on the hard-hit apparel and cosmetics verticals, he wrote, while smaller competitors could be making inroads.

“Additionally, we believe that BABA’s revenue should continue to trail its own GMV growth because of ongoing merchant subsidies, which are recorded as contra revenue,” he added, referring to gross merchandise volume, or the value of products and services ordered through the platform. Squali predicts about 4% revenue growth for Alibaba’s China commerce business in the March quarter.

Here’s what to expect when the company delivers its fiscal fourth-quarter results.

What to expect

Revenue: Analysts surveyed by FactSet expect Alibaba to deliver RMB199.5 billion ($29.9 billion) in March-quarter revenue, up from RMB187.4 billion a year earlier.

Earnings: The FactSet consensus calls for RMB7.10 in adjusted earnings per share for Alibaba’s latest quarter, down from RMB10.32 a year before.

Stock movement: Alibaba’s U.S.-listed shares have declined following each of the company’s last 10 earnings reports, according to FactSet data. They’ve lost 27% so far this year, as the S&P 500 index SPX, +1.57% has declined 17% and as the KraneShares CSI China Internet exchange-traded fund KWEB, -1.17% has dropped 27%.

What else to watch for

Wall Street is curious about Alibaba’s spending plans as the company’s growth slows, with Truist’s Squali pointing to a March Reuters report suggesting that the Chinese e-commerce giant could lay off up to 15% of its workers.

“While we have not seen any formal announcement from the company to-date, if true, these measures would help relieve some of the margin pressures we’ve observed over the last couple of years,” he wrote.

Baird’s Colin Sebastian added that “there is some optimism that the operating environment for Internet companies in China may be normalizing,” which he thought could help Alibaba’s shares in the long run. However, he expects that “management’s tone could remain cautious with respect to near-term growth and margins.”

Though the state of Chinese e-commerce is always a main focus of Alibaba’s report, Mizuho’s Lee cautions that the company’s international business could also be under pressure due to geopolitical events.

[W]e anticipate a meaningful slowdown in international business due to declining demand in Europe, supply shortage, and logistical challenges in the Russian rail network,” he wrote.

The report follows one from peer JD.com Inc. JD, +1.90% earlier in May. JD.com’s management team indicated that consumers were shifting their spending toward more essential items and warned of supply-chain disruptions.