Alibaba’s Stock Falters 4% in Early Trading After Disappointing Earnings Despite Cloud Expansion
Alibaba experienced a setback in its stock performance, declining 4% in premarket trading following a lackluster earnings report, despite showing growth in its cloud division.
Financial Disappointment
The e-commerce behemoth missed both revenue and profit expectations for the June quarter of 2024, facing challenges in its core online retail business amidst increasing competition and a cautious consumer market in China.
Here are the key figures for Alibaba’s performance compared to analyst estimates:
- Revenue: 243.24 billion Chinese yuan ($34.01 billion) versus an expected 249.05 billion yuan.
- Net income: 24.27 billion yuan versus an anticipated 26.91 billion yuan.
Alibaba reported a 4% year-on-year revenue increase, while net income plummeted by 29%. The decline in income was attributed to reduced operational earnings and increased impairment from the company’s investments.
E-commerce Strategy Revamp
Following a turbulent 2023 marked by significant corporate restructuring and leadership changes, Alibaba aimed to reinvigorate growth under new CEO Eddie Wu. The firm grappled with a wary Chinese consumer base and heightened competition from rivals like JD.com and PDD.
Wu has initiated efforts to stabilize Alibaba’s core China e-commerce operations by shifting focus towards third-party merchants on Taobao and Tmall platforms while diminishing reliance on direct sales.
Plans are in place to introduce new monetization features to drive growth in the latter half of 2025.
Cloud Growth
Alibaba’s cloud computing segment emerged as a highlight, with quarterly revenue surging to 26.5 billion yuan, marking a 6% year-on-year increase, the highest growth rate since 2022.
The Hangzhou-based company emphasized its investments in AI within the cloud domain, with AI-related product revenue experiencing triple-digit growth year-over-year. Efforts to elevate profitability through enhanced contract quality and operational efficiency drove a substantial 155% year-on-year surge in adjusted EBITA for the cloud division.
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