Alibaba’s Offices In Beijing Bloomberg | Bloomberg | Getty Images
Chinese e-commerce giant Alibaba surpassed profit expectations in the third quarter of September, despite falling short on sales due to a slowdown in the world’s second-largest economy affecting consumer spending. The company reported a 58% year-on-year increase in net income, reaching 43.9 billion Chinese yuan ($6.07 billion) for the quarter ending on Sept. 30, driven by the performance of its equity investments. This exceeded the forecast of 25.83 billion yuan by LSEG. Alibaba attributed the profit growth to mark-to-market changes in equity investments, a decrease in investment impairments, and an increase in operational income, as stated in its earnings report. Revenue for the quarter was 236.5 billion yuan, up 5% from the previous year but slightly below the analyst estimate of 238.9 billion yuan, according to LSEG data. The company’s stock listed in New York has seen a 17% increase in value year-to-date, with a 3% rise in premarket trading at 12:24 p.m. London time after the quarterly earnings were released.
Sales Performance
Investors are closely monitoring the performance of Alibaba’s core business units, Taobao and Tmall Group, which reported a 1% annual revenue increase to 98.99 billion yuan in the September quarter. This comes at a challenging period for Chinese e-commerce companies amid a subdued retail environment in the country. JD.com, another Chinese e-commerce group, also fell short of revenue expectations on Thursday, according to Reuters. The market is now looking to see if recent stimulus efforts by Beijing, including a 1.4 trillion yuan package announced last week, will revive economic growth and alleviate the long-standing real estate market decline. Initial data shows a positive impact on the retail sector, with October sales growing by a stronger-than-expected 4.8% year-on-year, and China’s recent Singles’ Day shopping event—a key indicator of consumer sentiment—showing signs of recovery. During the festival, Alibaba reported “strong growth” in gross merchandise volume for Taobao and Tmall Group, as well as a “record number of active buyers.”
Analysts from ING mentioned that Alibaba’s future prospects are closely linked to the trajectory of the Chinese economy and regulatory changes, stating that the company’s latest report would provide insights into China’s economic growth momentum. The company’s international online shopping platforms, including Lazada and Aliexpress, recorded a 29% increase in sales to 31.67 billion yuan.
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