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Updated February 7th, 2024 at 17:40 IST

Alibaba misses Q3 revenue estimates; boosts buyback by $25 billion

Under the leadership transition helmed by CEO Wu and Chairman Joe Tsai the company embarked on a reorganisation, dividing its business into six distinct units.

Business Desk
Alibaba CEO Eddie Wu
Alibaba | Image:x/@Investingcom
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Alibaba Group Holding: Alibaba Group Holding, China's e-commerce behemoth, missed analysts' revenue estimates for the third quarter, signaling challenges amidst a soft retail market and a sluggish economic recovery in the country. The company's US-listed shares responded positively to the news, surging by 3.5 per cent in premarket trading, following an announcement of a significant boost to its share repurchase programme of $25 billion through March 2027.

Under the leadership transition helmed by CEO Eddie Wu and Chairman Joe Tsai, both Alibaba co-founders, the company embarked on a reorganisation last March, dividing its business into six distinct units. Wu, who assumed the role of Group CEO in September, has been steering Alibaba towards a user-centric and AI-driven approach, aiming to counterbalance slower earnings growth.

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Despite these efforts, Alibaba faces challenges in navigating the recovery of China's online shopping market post-pandemic. With consumers in China tightening their spending amidst economic uncertainties, domestic e-commerce rivals like PDD Holdings, which owns Pinduoduo, have gained traction with their low-cost offerings. In response, Alibaba has ramped up efforts in discounting and offering budget-friendly products.

Last year, Alibaba abandoned plans to spin off its cloud business due to uncertainties stemming from US restrictions on chip exports for AI applications. However, the company's logistics arm, Cainiao, is seeking to list in Hong Kong, indicating ongoing strategic moves within the organisation. Additionally, recent reports suggest Alibaba's exploration of divesting consumer sector assets, including its grocery business Freshippo, retailer RT-Mart, and shopping mall operator Intime.

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For the three months ending on December 31, Alibaba reported revenue of 260.35 billion Yuan ($36.19 billion), falling short of the 262.28 billion Yuan expected by analysts polled by LSEG. This revenue miss underscores the challenges Alibaba faces in navigating the evolving landscape of China's retail market amidst broader economic uncertainties.

(With Reuters inputs.)

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Published February 7th, 2024 at 17:40 IST

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