Alibaba Group Holdings Ltd., a Chinese online retailer, saw a 1.03 percent increase;Underscoring Beijing’s enduring influence on domestic consumption and business activities, green up pointing triangle reported one of its weakest revenue increases since going public.
Thursday, the Hangzhou-based company reported that revenue for the July-September quarter increased by 3% compared to the same period a year earlier. This is a return to growth from the slight dip in the previous quarter, when widespread lockdowns caused disruptions in logistics and supply chains.
S&P Global Market Intelligence polled analysts predicted that sales would be $29.1 billion, but sales came in below that.
Alibaba has been dealing with economic difficulties brought on by Beijing’s stringent Covid-19 restrictions, competition, and the aftermath of a regulatory crackdown. In the past, Alibaba was one of the fastest-growing tech companies in China.
During a call with analysts on Thursday,
Chief Executive Officer Daniel Zhang stated, “The ongoing resurgence of Covid-19, geopolitical tension, inflation, and currency depreciation—the convergence of all these forces has created considerable difficulties for business operations.”
Alibaba stated that it will increase its existing $25 billion share buyback program by $15 billion in an effort to increase investor confidence.The program will remain in effect until March 2025.As of November 16, Alibaba said it had repurchased approximately $18 billion worth of its shares under its existing program.
The company’s stock increased as a result of the share buybacks, which contributed to a 7.9% gain on Thursday to $84.34.
The first nine months of the year saw a meager 3% economic expansion in China.The National Bureau of Statistics reports that retail sales, a measure of domestic consumption, decreased in October for the first time in five months compared to the previous year.
Online sales, which account for more than a quarter of all retail sales, performed better than in-store sales.According to official data, China’s e-commerce sales of physical goods increased by 12.5% year-over-year in the third quarter, exceeding the 7.5 percent growth in the second quarter.
Last week, Chinese authorities announced new regulations to ease pressure in the housing sector and limit pandemics in order to lessen the financial impact of strict Covid controls.According to The Wall Street Journal, Chinese leaders have not yet established a timetable for a more extensive reopening.
In an effort to improve investor confidence,
Alibaba stated that it would extend its share buyback program by $15 billion.
Mr. Zhang invited the presentation of new measures from the state specialists and said, “We truly do anticipate that things should keep on moving along.”
A crucial performance metric for Alibaba’s core domestic e-commerce business, sellers’ commission and advertising revenue losses decreased to 7% from 10% last quarter, but still came in lower than analysts had anticipated.According to the business, the primary cause of the decline was a modest drop in sales at its flagship platforms, Taobao and Tmall.
Live streaming and smart recommendation, according to Mr. Zhang, will be investigated by the company as novel strategies for enhancing customer engagement.
Vinci Zhang, a senior analyst at Pacific Epoch, a market research firm specializing in China’s digital economy, stated, “In this macro environment, as long as the pace of decline slows, it is a good sign.”
On the live-streaming e-commerce front,
which has seen rapid growth over the past few years in China, short-video platforms such as ByteDance Ltd.’s Douyin and Kuaishou Technology are increasingly eating into Alibaba’s market share. On the other hand, Alibaba’s dominance in the e-commerce market in China faces growing challenges from rivals JD.com Inc. and Pinduoduo Inc.
Alibaba has not disclosed exact sales figures for the Singles Day shopping festival, which ended on November 11, for the first time since it began. Instead, it has stated that results were comparable to those of the previous year.The company experienced its lowest sales increase since the event began in 2009.
According to Syntun, a provider of digital retail data, sales on traditional e-commerce platforms increased only 2.9% year over year across the sector.However, live-streaming platform sales more than doubled from the previous year.Douyin beat Taobao Live from Alibaba to become the live-streaming service with the most sales at the discount event.
Mr. Zhang emphasized the growing significance of live streaming.Mr. Zhang stated, “Alibaba is working hard to balance these different formats.”
As businesses tightened their budgets, Alibaba’s cloud business, which has been a growing revenue generator in recent years, also sputtered.In September, Alibaba Cloud pledged $1 billion to support its overseas cloud computing clients in an effort to boost growth.
Mr. Zhang stated that he anticipates businesses will gain confidence and be more willing to invest in digitization once the pandemic restrictions are lifted.
The Journal previously reported that U.S. accounting
inspectors recently spent weeks in Hong Kong going over the audit papers of U.S.-listed Chinese companies, including Alibaba.In December, the Public Company Accounting Oversight Board will decide if the inspection met U.S. laws.If the U.S. accounting watchdog is unable to inspect a company’s auditors for three years in a row, the company may be delisted from American stock exchanges.
Alibaba is likewise seeking after an essential posting of its stock in Hong Kong.According to Toby Xu, the company’s chief financial officer, the primary listing conversion will not be completed by the end of 2022 as planned. According to Mr. Xu, this is because, in order to comply with the new regulations in Hong Kong, Alibaba needs to establish and present a brand-new employee stock-ownership program to shareholders for approval.
In its reporting currency, Alibaba’s quarterly revenue was 207.2 billion yuan, up from 200.69 billion yuan the previous year.
In comparison to the same time last year, when net income was 5.4 billion yuan, net loss attributable to ordinary shareholders was 20.6 billion yuan, or $2.9 billion.The company claimed that price drops in its investments in publicly traded businesses played a part in the loss.
Based on Alibaba’s earnings disclosures, the Journal calculated that Ant Group Co., Alibaba’s financial-technology affiliate, made an estimated net profit of 7.25 billion yuan in the quarter that ended June 30. This was a 63% decrease from the same period a year earlier.Ant is owned by Alibaba, which receives one quarter of Ant’s profits in arrears.
According to Alibaba’s disclosure, the decrease in Ant’s operating profit and the decrease in Ant’s fair values of investments contributed to the decrease in Ant’s profit.