Alibaba – Buoying in Huge Economy

Alibaba – Buoying in Huge Economy


Alibaba Group Holding, China’s e-commerce giant, on Last Friday has released results for its second fiscal quarter ending Sep 30.

With the pace of 54 percent growth rate, the New York listed Alibaba generated revenue of 85.15 billion yuan ($12.4 billion) missing the analysts’ average estimates of 86.51 billion yuan for the quarter. Per share income of $1.40 beat the expected $1.06 per share income. Net income of 18.24 billion yuan with rise of 5 percent also missed the expectation of 19.3 billion yuan.

Earlier, Alibaba for July to Sep quarter had to turn down its expectation for growth rate and limited it  in between 5 percent to 6 percent for the same. The revision was made under the effects of China’s declining growth expansion and Trade war with America, which badly impacted the results of mostly China based companies including Alibaba. But Alibaba’s results still remained better than what analysts were expecting in deteriorating condition of the market in China.

Revenue of Alibaba’s core business of e-commerce contributes a major share of 85 percent towards total revenue of the company. For the last quarter with an increase of 56 percent for the year, e-commerce business of Alibaba added a sum of 72.48 billion yuan to 85.1 billion yuan of revenuw in total.

To coup up with the current sluggish economic situation, Alibaba is focusing on other options available in the $12 trillion economy of China. Alibaba after enjoying a matchless hold on local consumers shopping online for a long period of time, lately decided to expand its retail business under bricks and wall too. Hema Supermarkets in retail and Cainiao in Logistics was the result of this quest for expansion offline. Number of Hema stores reached to 80 from 20 stores a year ago raising 151 percent revenue growth for last quarter from a year ago for the segment.

For Cloud Computing services, Alibaba built data centers not only across China but also expanded its services through 19 data centers in other regions around the globe. In turn for the last quarter Alibaba cloud computing business showed a growth of almost 90 percent from a year and generated revenue of 5.7 billion yuan.

Segments like digital media and entertainment, besides having small share in total revenue, also showed a notable growth for the last quarter.

Previous articleExxon is committed for Higher Output
Next articleSamsung facing “Spend more but replace less
Brayden Fortin is a American with numerous years of investment experience in the American Equity Market and in the Global Commodity Market. He has a B.Com degree from a well respected Canadian university and has experience working in the wealth management industry. He is interested in delving into numbers to analyze companies and markets. He won a couple of international strategy simulation competitions involving decision making through numerical analysis, and also scored in the top 50 on the Bloomberg Aptitude Test (out of nearly 200,000 test takers).