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HomeTechnologyFollowing A Huge Earnings Beat, Alibaba Shares Increased By 6%

Following A Huge Earnings Beat, Alibaba Shares Increased By 6%

Alibaba’s third fiscal quarter earnings exceeded everyone’s expectations, pushing the company’s shares up 4%.

In comparison to Refinitiv consensus estimates, here is how Alibaba performed in its third fiscal quarter, which spanned from October to December 2022: Alibaba’s third fiscal quarter earnings exceeded everyone’s expectations, pushing the company’s shares up 4%.

In comparison to Refinitiv consensus estimates, here is how Alibaba performed in its third fiscal quarter, which spanned from October to December 2022:

Sales increased by 2% year over year to 247.76 billion Chinese yuan from the anticipated 245.18 billion Chinese yuan.
Profits per American depositary share (ADS) increased 14% year over year to 19.26 yuan from the anticipated 16.26 yuan.
Net income increased 69% year over year to 46.82 billion yuan from 34.02 billion yuan.

From its peak in October 2020, Alibaba’s worth has lost around $600 billion as a result of China’s strong Covid-19 control regulations, China’s tightening regulatory environment for tech companies, and the ensuing economic slowdown.

Investors hope that China’s economic re-opening will help raise consumer morale and spending, which will ultimately aid the e-commerce giant. As a result, Alibaba shares in Hong Kong finished higher on Thursday ahead of earnings. China abruptly removed its rigorous Covid regulations, including lockdowns, during the December quarter. Due to the fact that it occurred in December, this is unlikely to be completely reflected in the quarter.

The China commerce section of Alibaba, which includes its well-known marketplace Taobao, brought in a total of 169.99 billion yuan in revenue, a 1% year-over-year decline. The decrease was caused by a 9% decrease in customer management revenue, which Alibaba collected from the sale of services like marketing to retailers on its Taobao and Tmall e-commerce platforms.

The number of transactions made on Alibaba’s online shopping platforms, or the gross merchandise volume, “declined mid-single-digit year-over-year, mainly due to soft consumption demand and ongoing competition as well as a surge in COVID-19 cases in China that resulted in supply chain and logistics disruptions in December,” according to Alibaba.

The China commerce section of Alibaba, which includes its well-known marketplace Taobao, brought in a total of 169.99 billion yuan in revenue, a 1% year-over-year decline.

The decrease was caused by a 9% decrease in customer management revenue, which Alibaba collected from the sale of services like marketing to retailers on its Taobao and Tmall e-commerce platforms.

The number of transactions made on Alibaba’s online shopping platforms, or the gross merchandise volume, “declined mid-single-digit year-over-year, mainly due to soft consumption demand and ongoing competition as well as a surge in COVID-19 cases in China that resulted in supply chain and logistics disruptions in December,” according to Alibaba, via a press release, it was said.

Alibaba has pursued expansion in international markets through its South East Asia company Lazada and through global e-commerce platform AliExpress while its business in China has slowed. Revenue from international trade increased by 18% on a yearly basis to 19.47 billion Chinese yuan.

As regulation enforcement becomes more predictable, the regulatory tightening that occurred over the previous two years is beginning to loosen.

When the full impact of the Chinese economic reopening is realized, analysts anticipate that Alibaba will experience stronger revenue growth during the ensuing quarters. For the first time in three years, Morgan Stanley just declared Alibaba its “top pick” in the Chinese tech industry.

Alibaba started taking cost-cutting initiatives last year in an effort to increase profitability. While continuing to make significant investments for long-term growth, Alibaba is attempting to strike a balance between costs.

In the midst of its stock decline, the corporation is simultaneously attempting to increase shareholder confidence. As part of its ongoing $25 billion share repurchase program, which will be extended through the end of its fiscal year in December, Alibaba’s board approved an extra $15 billion in November.

fiscal year 2025. When the full impact of the Chinese economic reopening is realized, analysts anticipate that Alibaba will experience stronger revenue growth during the ensuing quarters. For the first time in three years, Morgan Stanley just declared Alibaba its “top pick” in the Chinese tech industry.

Alibaba started taking cost-cutting initiatives last year in an effort to increase profitability. While continuing to make significant investments for long-term growth, Alibaba is attempting to strike a balance between costs.

In the midst of its stock decline, the corporation is simultaneously attempting to increase shareholder confidence. Alibaba announced in November that its board has approved an additional $15 billion for its current $25 billion share buyback program, which will be continued through the end of the year end of its fiscal year 2025.

Alibaba is also in the process of designating Hong Kong as its “primary” listing for its shares, opening up direct stock trading for investors in mainland China. The procedure, however, will not be finished in 2022 as originally anticipated, the business stated in November. Alibaba is also in the process of designating Hong Kong as its “primary” listing for its shares, opening up direct stock trading for investors in mainland China. The procedure, however, will not be finished in 2022 as originally anticipated, the business stated in November.

Source (CNBC)

 

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