Alibaba Group (BABA) Stock Gains Sharply on Earnings, Revenue

Shares of the Alibaba Group Holdings Ltd (BABA) were trading up +6.35 or +8.32 percent to $82.70 in Tuesday’s premarket after the company reported better than expected earnings and revenue in the company’s second quarter. Alibaba stock closed at $76.35, up +0.73 or +0.97 percent in Monday’s regular trading session.

Hangzhou, China based Alibaba Group Holding Ltd is a network of internet e-commerce and business to business websites and web portals.
The company has a payment and escrow service called Alipay which accounts for as much as half of all online payments in China, as well as a shopping search engine and cloud computing services. The company, founded in an apartment by Jack Ma, became a group in 1999, when the website was formed as a business to business portal connecting Chinese manufacturers to foreign buyers. Alibaba went public at $68 per share back in September of 2014, in the world’s largest initial public offering ever raising $25 billion for the company.

The company reported earnings per share of 3.63 RMB, which beat analyst estimates by 0.21 RBM on revenue of 22.17 billion RMB or $3,488 million, 850 million RMB better than expected and an increase of +32 percent over the same period one year ago.

Alibaba reported it had transacted 713 billion RMB or $112 billion in Gross Merchandise Value or GMV, the total value of products transacted on the company’s retail marketplaces in China. While the company showed an increase of $25 billion or +28 percent in the company’s fiscal second quarter ended on September 30th, the rate of growth was the slowest in three years.

Daniel Zhang, Chief Executive Officer of Alibaba Group said in the company’s press release that, “This was a great quarter for Alibaba Group, with strong growth across the board and particular outperformance in mobile. We continued our efforts to drive healthy GMV growth, deliver an unparalleled consumer experience and help quality merchants do business on our platform. We are winning in mobile and remain focused on our top strategic priorities, including internationalization, expanding our ecosystem from cities to villages, and building a world class cloud computing business.”

Alibaba reported annual active buyers had increased +28 percent to 386 million in the quarter, while mobile monthly users increased 346 million or +59 percent. The company’s cloud computing and Internet infrastructure businesses had revenue of $102 million, an increase of +128 percent over last year’s results.

Monetization improved significantly, with blended monetization rising 12 basis points to 2.42 percent from 2.30 percent in the same period one year ago. In addition, Alibaba bought back 40.8 million of its shares for a total of $2.74 billion in the quarter.

Alibaba stock has been rising in the past two weeks, gaining approximately nine percent in the period leading up to this morning’s earnings release and more than +30 percent for the month of October. Nevertheless, despite this morning’s gains, the stock is still well below the level it was trading at in November of last year, when Alibaba’s share price rose to more than $119.

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Published on Oct 27, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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