Alibaba (BABA) Shares Soar on Revenue, Sales Beat

Shares of Alibaba Group Holding Limited (BABA) were trading up +4.33 or +5.71 percent to $80.15 per share in Thursday’s premarket after announcing fourth quarter earnings early this morning. While falling short of forecasts on earnings per share, the company’s revenue and net sales for the quarter surpassed expectations. Alibaba Group stock closed at $75.82, down -0.09 or -0.12 percent in Wednesday’s regular trading session.

Stock Analysis

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 in September of 2014, in the world’s largest initial public offering ever raising $25 billion for the company.

Non-GAAP net income for the company’s fourth quarter ended on March 31st — Alibaba’s preferred earnings measure — declined -1.4 percent to 7.6 billion RMB, the company’s first reported decline. With the exclusion of certain items, earnings per share came to 3.02 RMB.

Revenue for the quarter increased to 24.2 billion RMB or $3.7 billion compared to 17.4 billion RMB in the same period one year ago, an increase of +39 percent. The analyst consensus was for Alibaba to report earnings per share of 3.58 RMB on revenue of 23.22 billion RMB.

Daniel Zhang, Chief Executive Officer of Alibaba Group noted in the company’s press release that, “Alibaba Group finished the fiscal year on a very strong note. In March, we surpassed RMB3 trillion in annual GMV and our revenue for the year was over RMB100 billion. We achieved strong growth in mobile users, active buyers and transactions. Our focus on long-term strategic priorities – globalization, rural expansion, building a world-class cloud computing business and creating a comprehensive media and entertainment platform – has laid a strong foundation for future growth.”

Other highlights reported by the Chinese e-commerce giant included its number of active mobile monthly users, which increased +42 percent to 410 million, also, Alibaba’s Gross Merchandise Volume or GMV, the total amount of goods transacted increased +24 percent to 742 billion RMB ($115 billion). Net income for the quarter increased to 5.81 billion RMB compared to 2.87 billion RMB in last year’s fourth quarter.

Mobile GMV continued expanding and accounted for +73 percent of total GMV, up from +68 percent in the previous quarter. The company’s cloud and Internet infrastructure also continued growing, with a +175 percent year on year increase of 1.06 billion RMB ($165 million), which represents a +126 percent rate of growth from the previous quarter.

Alibaba reported it had acquired a controlling interest in Lazada for $1 billion. Lazada is a leading e-commerce platform in Southeast Asia operating online platforms in Thailand, Malaysia, the Philippines, Singapore and Vietnam. Lazada will give Alibaba access to 560 million consumers in Southeast Asia and the acquisition is part of the company’s international strategy for e-commerce. The market is showing optimism in this morning’s premarket, with Alibaba shares up over five percent.

Other News About BABA

Alibaba Shares Could Reach $130

According to Barrons, the stock’s price/earnings should show a growth multiple of 1.0X.

Tencent backs down in mobile payments war with Alibaba

Gaming and social networking company, Tencent has pulled back from its battle with Alibaba for control of China’s mobile payments market.

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Published on May 5, 2016
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 2016. Content published with author's permission.

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