What Investors Should Worry About When Alibaba Declares Earnings Tommorow

Shares of the retailing giant Alibaba Group Holding Ltd BABA, which is scheduled to report its fiscal '16 first-quarter earnings before markets open for trade on Wednesday, were trading significantly down on Tuesday. Mark Yusko, CEO and CIO of Morgan Creek Capital Management, was on CNBC to discuss investors sentiments ahead of Alibaba's earnings and outlook for Alibaba.

China Doing A Great Job

"There's a lot of negative sentiment out there," Yusko began. "There's a lot of consternation about what's going on in China globally. I think, one of the biggest problem is a focus on the quantity of growth as opposed to the quality of the growth. I think, China is actually doing a great job transitioning from fixed asset investment to consumption."

Growth In Mobile

He continued, "I think, the growth in the mobile component of e-commerce over the next decade is supposed to compound at 56 percent. So, you do that 1.56 to the tenth power, that's a 65 times increase in the size of that market. So, we think there is really huge potential long-term for e-commerce and for mobile e-commerce in companies like Alibaba."

Worried About Sentiment

Yusko was asked what he is worried about We are worried a little bit about just the sentiment...and what's going on with people shooting first and asking questions later, selling first and asking questions later. People tend to do two things really well. Human beings tend to buy what they wish they would have bought.'

"So there were a lot of buyers when Alibaba was $120 and it just gone up a lot and they tend to sell what they are about to [need]. So, there's a lot of people thinking that they need to sell here."

At the time of this writing, shares of Alibaba were trading down 4.4 percent.