Alibaba Group Holding Ltd.’s earnings report tells us two important things about China’s largest e-commerce company: It’s finding growth and profit through its latest initiatives, including rural expansion, but there are signs of the slowdown in the world’s second-largest economy that’re spooking investors.
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Koubei, the local services joint venture we recently established with Ant Financial, is gaining strong momentum and winning market share, generating RMB15.8 billion (US$2.4 billion) in GMV transacted through Alipay during the quarter, with daily transactions averaging more than 5 million in December.
Last year, the company backed the merger of Didi and Kuaidi to create China’s biggest ride-hailing application.
In the latest quarter, Alibaba reported 407 million annual active buyers, up 22% from a year earlier.
The company has firm belief in the increased demand for processing and storage from government and other organizations and has thus staked $1 billion on its AliCloud unit.
Chinese online retail giant has posted a 32 per cent growth year-on-year in revenue for its Q4 results, bolstered by a significant rise in mobile revenues.
Overall, the company’s profit more than doubled to $US1.92 billion, or 76 cents a share.
For the previous quarter ending in September, the Hangzhou-based retail titan reported revenue of $3.5 billion, up 32% on the year, with earnings per share of 57 cents. Mobile revenue from the China commerce retail business rose 192% to $2.89 billion, or 65% of the company’s total China commerce retail business. While he believes the company “can maintain its ~25% growth rate” for the foreseeable future, the analyst cites that Alibaba is losing market share to competitors such as JD, who has a faster growth rate. The company had revenue of $5333.00 million for the quarter, compared to analysts expectations of $5134.43 million.
The fact that Alibaba did this while China’s economy has slowed to its slowest growth rate in the last 25 years makes the feat all the more impressive.
Alibaba Group Holding Ltd (NYSE:BABA)’s stock had its “outperform” rating reiterated by stock analysts at RBC Capital in a research note issued on Thursday, MarketBeat.com reports.
Billionaire Ma is tapping the spending power of rural areas, where more than half the population live, by providing purchasing and delivery services as he captures a greater slice of the money spent on mobile shopping and advertising. The share price has dropped -33.11% from its peak and so far in this year moved backward -13.41%.
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“Investors’ concerns on economic impact on Alibaba’s quarterly results is likely overdone”, Mr. Guo said. Shares jumped 4 percent in premarket trading.
