Alibaba revenue of $4.22B misses by $230M as shares fell from 98.06 to 90.12 at opening of trade.
Alibaba share price dropped 2.84% to $100.02 one day ahead of the internet retailer’s next earnings report; the day came and though earnings were positive and margins are still extremely high, Alibaba’s earnings fell against expectations. Shares plummeted on Thursday’s opening market from $98.06 to $87.07 in first half hour, a far cry from the $119 mark reached in November and veering backwards towards its initial public offering price of $68 a share when Alibaba was launched in September 2014 to the tune of $21.8 billion.
Share earnings beat forecasts by $0.06 providing $0.81 per share versus consensus expectations of $0.75 from Reuters.
“We delivered a strong quarter with significant growth across our key operating metrics,” said Jonathan Lu, chief executive officer of Alibaba Group. “Gross merchandise volume across our China retail marketplaces grew 49% year on year, and our annual active buyers increased to 334 million in 2014, an increase of 45% year on year. Our unrivaled leadership and momentum in mobile continued — we added 48 million active users sequentially and delivered over US$1 billion in mobile revenue during the quarter.”
But Alibaba’s earnings are clouded by investors’ disappointments. Firstly with the company’s approach to counterfeit products as regulators from the Chinese government tell Alibaba that products on its site are fake and Alibaba do not accept the accusation. Secondly, investors are frustrated with the results of a stream of acquisitions made in 2014 against a background of the slowing economy in China, which subsequently lead to low revenue. Thirdly, investors misunderstanding that the growth seen on Single’s Day ($9 billion sales) would be extrapolated across the whole quarter when in fact Single’s Day took up much of the retail spend for that month in one day.
Revenue increased by 40% to RMB26,179 million (US$4,219 million) in the quarter ended December 31, 2014, compared to RMB18,745 million in the same quarter of 2013.
Net income in the quarter ended December 31, 2014 was RMB5,983 million (US$964 million), a decrease of 28% compared to RMB8,357 million in the same quarter of 2013.
MT4 chart: Alibaba
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