Alibaba Suffers Revenue Slow Down But Still Beats Estimates
Author By Sophia VidaPosted on Chinese e-commerce giant Alibaba reported financial results for the December Quarter and beat expectations, surprising many on Wall Street as companies had warned about China’s economic slowdown.
Net income at Alibaba saw a jump of 37 percent to 33.1 billion yuan in the December quarter. This was better than the 22.1 billion yuan that had been expected. Adjusted earnings-per-share was 12.2 yuan compared with11.2 yuan projected.
Revenue also saw a jump of 41 percent to 117.3 billion yuan, but it was the slowest growth in over two years for the company. It was also behind the 119.4 billion yuan expected.
“In the future, obsessing on the rate of growth is not meaningful because of the law of large numbers. The reality is the absolute dollar amount of new wealth creation in the Chinese economy will be well over USD 800 billion each year,” said Alibaba’s co-founder Joe Tsai to analysts on Wednesday.
“We have witnessed the government becoming more adept at calibrating the interplay between regulation and economic growth,” Tsai said. “The bigger point here is that the Chinese government is now getting quite sophisticated in terms of targeting the government measures more towards fiscal policy.”
“While the Chinese economy suggests a bleaker outlook in 2019, the company continues to grow its user base at a healthy rate and is working on monetizing new ad revenue streams, which should keep driving growth in the coming year,” eMarketer forecasting analyst Oscar Orozco remarked.
“The market might view this as the end of the adjustment period and the worst is behind us, and send shares up,” said Eric Wen, founder and CEO of Blue Lotus Capital Advisors. “E-commerce active customer growth is good, mobile monthly active users of e-commerce app is good, but profitability was pretty bad as expected.”
Alibaba is the second most valuable public company in Asia after Tencent.
Disclaimer: We have no position in Alibaba Group Holding Ltd. (NYSE: BABA) and have not been compensated for this article.
