Alibaba Group Holdings Sales Beat Estimates

Alibaba Group Holdings (BABA) has been a darling of Wall Street ever since its went public last year. However, Wall Street turned against when the company reported lackluster results in the first quarter. However, the company has turned it around after reporting higher sales for the second quarter. The street loves growth companies as long has the growth,however, they hate when these companies miss their estimates. This tend to lead to these growth companies highly volatile.

Alibaba Group reported adjusted earnings of $57 cents or RMB 3.63 on revenues of $3.39 billion.
The company saw its earnings increase a 170% year over years. Alibaba saw 32% increase from the previous quarter last years. Wall Street analyst had expected revenue of RMB 3.367 billion and earnings of RMB 3.46. The company reported earnings of $1.48/share or RMB 8.87/share. Alibaba higher than expected revenue and earnings was driven by larger sales for the third quarter. Alibaba's higher sales was driven by more consumers on its Chinese marketplace.

The company saw its EBITDA increase to $1.754 billion exceeding analyst estimates of $1.664 billion. Alibaba saw their gross merchandise volume rise 28% to $112 billion, however, the company missed analyst estimates by $1 billion. Even those the company barely missed analyst estimates on gross merchandise volumes saw on the other hand mobile merchandise volumes made up 62% of total merchandise volumes. The company has seen its mobile merchandise volumes increase 183% year over year. In the quarter last September the company mobile merchandise volumes were up 55%. Mobile growth in China will continue to drive large growth for Alibaba and other tech companies in China.

Alibaba has a larger users base than the population of the United States. The company has 388 million annual active users and 346 million monthly users active users at the end of September. Alibaba continues to see buyers purchase across all more categories and build out its business. The company is expanding its business into rural areas. Alibaba is building out its logistic systems to be able to deliver in package to any city in China within 24 hours. The completion of Alibaba logistic system expansion is expected to take 10 years.

The company like Amazon has reinvested heavily in cloud computing and internet infrastructure. Alibaba saw it revenues from cloud and internet infrastructure climb 128% to $102 billion. The company's cloud computing was the driver in the company's cloud computing and internet infrastructure segment. Alibaba is offering more complex like its content delivery network and database services.

The economic woes of China has continued to be a key factor in underlining of Alibaba in the second quarter and going forward. Investors fears of the economic woes in China will continue to way on Alibaba and other Chinese companies. Alibaba's had to slash it second quarter guidance because of the what is happening in China. However, the company reported better than expected results. Even with the problems in China Alibaba is growing massively and see larger sales and revenue thanks to that growth. Alibaba will continue to be a Wall Street darling because of its large growth in China. If you a growth investor Alibaba is a company you should add to your portfolio since I can easily see the company selling for $600/share just like Amazon.
Published on Nov 2, 2015
By Cody Eustice
Cody is a freelance writer who has been writing financial articles for various sites for over a year now. He is a value investor looking for companies that sell for far less than their estimated business value.

Copyrighted 2020. Content published with author's permission.

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