Alibaba (BABA) Shares Rally on 2Q Earnings, Revenue Beat

Shares of Alibaba Group Holding Limited (BABA) were trading up +4.92 or +5.63 percent to $92.25 per share in Thursday’s premarket after announcing second quarter earnings early this morning. Alibaba beat the analyst consensus for both earnings and revenue in the quarter. Alibaba Group stock closed at $87.33, up +2.09 or +2.45 percent in Wednesday’s regular trading session.


Stock Analysis

Hangzhou, China based Alibaba Group Holding Ltd was founded by Jack Ma, becoming a group in 1999.
The company consists of a network of internet e-commerce and business to business websites and web portals. Alibaba became a group in 1999, with Alibaba.com becoming a business to business portal connecting Chinese manufacturers to foreign buyers.  The company has a payment and escrow service called Alipay which accounts for as much as half of all online payments in China, a shopping search engine and cloud computing services. 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.

For the company’s fiscal second quarter ended on June 30th, Alibaba reported a GAAP net profit of RMB7.55 billion, or RMB2.94 per share compared to RMB30.84 billion or RMB11.92 per share in 2015’s second quarter, a decline of -76 percent. The sharp decline year on year was in large part due to a onetime investment gain of RMB27.38 billion related to the company’s movie division, Alibaba Pictures taken last year.

On a non-GAAP basis, with the exclusion of certain items, diluted earnings per share came to RMB4.90 or $0.74. Revenue for the quarter was RMB32.15 billion or $4.83 billion, which compares to RMB20.25 billion in the same period one year ago, an increase of +59 percent. The analyst consensus was for the company to report earnings of RMB4.17 on revenue of RMB30.1 billion.

Alibaba Group Chief Executive Officer, Daniel Zhang stated in the company’s press release that, “The acceleration of our revenue growth reflects the deep value propositions that we bring to our customers. We are changing the way our 434 million active buyers engage with our platform, as we introduce social, community and personalization driven by smart data into our e-commerce marketplaces, realizing our vision of ‘Live@Alibaba.’ We are poised for strong profitable growth into the future.”

China retail marketplace revenue was RMB23.38 billion or $3.51 billion, an increase of +49 percent over last year’s second quarter; however, the biggest increase was in the mobile sector, with mobile China retail marketplaces of RMB17.51 billion or $2.6 billion, with an impressive year on year increase of +119 percent and representing 75 percent of the company’s total China retail marketplace revenue.

Mobile monthly active users in June came to 427 million, an increase of 17 million users from March of this year. Active buyers on the company’s China retail marketplaces grew to 434 million, an increase of 11 million annual active buyers from the previous quarter.

Alibaba stock will open at a 14-month high, trading over $92 per share this morning. The company’s stock has surged since its initial offering in 2014 at $68 per share. With today’s premarket move, the stock will be +35 percent higher than when it went public.

Other News About BABA

Will Alibaba's Move to Greater Transparency Pay Off as It Has for Google and Amazon?

This morning’s earnings release included greater details on the company’s cloud and entertainment businesses.

Alibaba Cautioned on Fakes in Rare Public Comments

Zhang Mao, head of China’s State Administration for Industry and Commerce cautioned CEO Jack Ma about pirating on the Alibaba platform.

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Published on Aug 11, 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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