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Updated February 7th, 2024 at 18:48 IST

Alibaba misses Q3 revenue estimates on slower Chinese economy

Acknowledging the challenges, Wu emphasised the company's commitment to rejuvenating its core businesses, particularly e-commerce and cloud computing.

Business Desk
Alibaba
Alibaba | Image:Alibaba
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Alibaba Group Holding fell short of analysts' revenue expectations for the third quarter, impacted by sluggishness in the retail market and the slower economic rebound in China, the world's second-largest economy.

Pre-market trading of Alibaba's US-listed shares saw a 1.3 per cent increase after the company announced plans to expand its share repurchase program by $25 billion until the end of March 2027.

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Net income attributable to ordinary shareholders totalled 14.4 million yuan ($2 million), with overall net income amounting to 10.7 million yuan ($1.51 million), marking a 77 per cent decline.

Last March, Alibaba initiated a restructuring effort, dividing its business into six units under the leadership of CEO Eddie Wu and Chairman Joe Tsai, both co-founders of the company. Wu, who assumed the role of group CEO in September, has increased his focus on overseeing the domestic e-commerce arm as Alibaba seeks to revitalise growth in its core divisions amid intensified competition and slower earnings growth.

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Acknowledging the challenges, Wu emphasised the company's commitment to rejuvenating its core businesses, particularly e-commerce and cloud computing.

The pressure on Alibaba has intensified as Chinese consumers adopt cost-saving measures amidst a gradual post-COVID recovery, benefiting low-cost domestic e-commerce players like PDD Holdings (PDD.O). PDD's ascent to becoming China's most valuable e-commerce company in December reflects investor concerns over Alibaba's cloud business turnaround and customer management revenue.

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Alibaba's decision to halt the spin-off of its cloud business last year, citing uncertainties surrounding US restrictions on chip exports for AI applications, impacted its market valuation significantly.

Recent reports suggested Alibaba's intention to divest certain consumer sector assets, including its Freshippo grocery business, amidst intensifying competition with Walmart's Sam's Club. However, a spokesperson for Freshippo denied the reports of a potential sale.

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Despite challenges, Alibaba's International Digital Commerce segment, which includes retail and wholesale marketplaces like AliExpress and Alibaba.com, demonstrated robust performance, with AliExpress orders surging by 60 per cent year-on-year.

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Published February 7th, 2024 at 18:48 IST

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