Alibaba misses analyst estimates in soft market
China’s Alibaba Group Holding has missed analysts’ estimates for third-quarter revenue, hit by softness in the retail market and sagging economic recovery in the world’s second-largest economy.
The price of US-listed Alibaba shares rose 1.3% in pre-market trading on Wednesday after the company flagged an increase of $25bn in its share repurchase programme to the end of March 2027.
Net income attributable to ordinary shareholders was 14.4billion yuan ($2bn) and net income was 10.7-billion yuan ($1.51bn), a decrease of 77%.
Alibaba announced the split of its business into six units last March in a transition overseen by Alibaba cofounders CEO Eddie Wu and chair Joe Tsai.
The group said in December that Wu, group CEO since September, would directly oversee its domestic e-commerce arm, sharpening his focus on core divisions of the company as it combats slower earnings growth and rising competition.
“Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing,” Wu said on Wednesday.
Taobao and Tmall Group revenue grew only 2% for the quarter, which includes year-end sales festivals such as Singles Day that have traditionally driven growth.
Executives on a post-earnings call said early evidence of a recovery in Taobao and Tmall Group’s gross merchandise volume or GMV was more recently becoming apparent.
“Our strategy is focused on increasing purchasing frequency, if we do that we will achieve better GMV growth,” said Wu.
Alibaba is under pressure as consumers in China have been cutting costs in response to a stuttering post-Covid recovery, boosting low-cost domestic ecommerce players such as PDD Holdings.
PDD, which owns Pinduoduo and overseas-focused platform Temu, soared past Alibaba on December 1 to become the most valuable Chinese e-commerce company after Morgan Stanley downgraded Alibaba on concern about slower turnaround in its cloud business and customer management revenue.
Alibaba scrapped plans to spin off its cloud business last year, citing uncertainty about US curbs on exports to China of chips used in artificial intelligence applications, in a big blow to its market value at the time.
Last week, sources told Reuters that Alibaba was looking to sell a number of consumer sector assets, including its grocery business Freshippo, which has been locked in a price war with Walmart’s membership chain Sam’s Club, leading both sides to cut prices on popular items.
A Freshippo spokesperson denied reports of any sale.
Alibaba’s International Digital Commerce segment, which operates various retail and
LAST WEEK, SOURCES TOLD REUTERS THAT ALIBABA WAS LOOKING TO SELL SEVERAL CONSUMER SECTOR ASSETS
wholesale marketplaces including AliExpress and Alibaba.com., performed strongly, with AliExpress orders rising 60% on the year.
“There is huge potential for
AIDC (Alibaba International Digital Commerce) to increase penetration in many markets,” said AIDC CEO Jiang Fan on a call with analysts after the quarterly earnings release.