Alibaba beats the Street thanks to strength in ecommerce and cloud
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Alibaba beats the Street thanks to strength in ecommerce and cloud

Chinese ecommerce giant Alibaba, the country’s market leader in online retail and cloud computing, reported earnings last Thursday that beat analysts’ expectations on the top- and bottom-lines. The company defied doom-and-gloom reporting over a Chinese slowdown and the US / China trade war to demonstrate huge growth in its core ecommerce business, as well as the all-important cloud segment that many observers think will be critical to the future of the technology sector.

Alibaba’s positive results sent the share price up by 9% last week

Alibaba Aug 19

Source: Yahoo Finance

Here are some of the numbers: Alibaba saw its top-line figure rise by an impressive 42% against the same period a year earlier. The company reported revenues of 114.92 billion yuan ($16.3 billion). That easily beat the Street’s prediction for revenues of 111.73 billion. On the bottom line, Alibaba also outperformed, returning 12.55 yuan per share – an easy beat against consensus estimates of 10.25 yuan.

Daniel Zhang, the company’s CEO and successor to founder Jack Ma, praised “an outstanding quarter, with excellent business performance and a sound execution against our overall strategy,” and noted that Alibaba had outperformed despite “a conservative approach in monetization to support SMEs in this uncertain micro economic environment.”

Analysts agreed with him about Alibaba’s success over the quarter. Michael Norris at Shanghai-based consultancy AgencyChina, said: “It’s surprising how resilient Alibaba is. There’s a big disconnect between Wall Street, which has really given a beating to Alibaba’s shares, and people on the ground.”

Steven Zhu, a Pacific Epoch analyst, thinks Alibaba deserves credit for its recent innovations, saying: “Despite the macro environment not being as good as last year, Alibaba has launched a lot of new initiatives and the personalized product feed is helping maintain its growth rate. Its live-streaming services and collaboration with international brands are helping.”

Disclosure

Dominion holds Alibaba in its Global Trends Ecommerce Fund.


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