Final hours! Save up to 55% OFF InvestingProCLAIM SALE

Alibaba shares sink on quarterly revenue miss, weak China outlook

Published 19/05/2023, 03:38 pm
© Reuters
HK50
-
0700
-
JD
-
BABA
-
PDD
-
9988
-
9618
-

Investing.com -- Hong Kong-listed shares of e-commerce giant Alibaba Group (HK:9988) sank on Friday as a slowing economic rebound and growing competition in China, its biggest market, spurred disappointing quarterly earnings.

The firm logged revenue of RMB208.20 billion ($1 = RMB7.04) for the three months to March 31, lower than analyst estimates of RMB210.3B. Its revenue for the year to March 31 also rose just 2% to RMB868.69B, its worst pace of growth since the company listed in 2014.

Alibaba’s Hong Kong shares sank more than 5%, tracking a similar overnight decline in the firm’s American Depository Receipts (NYSE:BABA). The stock took little support from Alibaba saying that it will spin off and list its cloud unit within the year. 

While the stock had received some support in recent sessions, especially as the “Big Short’s” Michael Burry doubled his stake in the firm, Friday’s losses saw it unwind most recent gains, with the stock now trading just above a two-month low.

Alibaba’s Chinese direct sales, which make up the biggest portion of its revenue, fell 1% in the quarter, as consumer spending in China continued to struggle despite the lifting of anti-COVID measures.

Revenue from other China-focused businesses also declined, as the firm faces increased competition from other e-commerce entrants, including JD.com (HK:9618) (NASDAQ:JD) and PDD Holdings Inc (NASDAQ:PDD).

While Chinese consumer spending rose somewhat this year, it still remained well below pre-COVID levels. But it still helped Alibaba log a net profit of RMB23.52B for the year, compared to a loss of RMB16.24B last year. 

The firm also faces a brewing price war in its cloud business with rival Tencent Holdings Ltd (HK:0700), amid weak corporate demand and excess capacity in the space.

Alibaba is also attempting to break into the generative artificial intelligence space with its Tongyi Qianwen model, which it had revealed last month. The firm has now opened up registration to test the technology for Alibaba Cloud’s enterprise customers. 

The broader Hong Kong Hang Seng index fell 1.1% on Friday, as losses in Alibaba spilled over into other heavyweight technology stocks.

 
 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.