若离若离 ・ Feb. 8, 2024
Alibaba Stocks Drop Nearly 6% Despite $25 Billion of Additional Buyback Unveiled following Sales Miss
Alibaba posted slower-than-expected growth of sales in December quarter with an increase of 5%. Net income crashed 69% due to impairment of intangible assets related to Sun Art and impairment of good will from Youku.

BEIJING, February 7 (TMTPost)-- Shares of Alibaba Group underperformed the market when the U.S. stock benchmark S&P 500 hit a record on Wednesday. The American depositary receipts (ADRs) of Alibaba dropped as much as 6.5% in midday and settled around 5.9% lower even the Chinese top e-commerce company announced a massive additional buyback plan following financial results in the last quarter.

Credit:Alibaba

Credit:Alibaba

Alibaba said it's board of directors approved an increase of US$25 billion to its share repurchase program in the next three fiscal years. The new buyback suggests more than three-fold increase for the current plan, bringing the total available under the plan through March 2027 to US$35.3 billion. Chief Financial Officer Toby Xu said the decision demonstrated "our confidence in the outlook of its business and cash flow".

The stock performance showed such significant increase in buyback failed to ease investors’ concern on Alibaba’s outlook amid ongoing uncertainties of macroeconomic recovery and increasing competition from new rivals like PDD Holdings Inc.

Alibaba posted slower-than-expected growth of sales in the quarter ended December 31 2023, or its third fiscal quarter of the fiscal year 2024. Revenue that quarter rose 5% year-over-year (YoY) to RMB260.35 billion (US$36.67 billion), missing Wall Street expectation of RMB262.07 billion. The YoY growth evidently decelerated cooling from the previous quarter. The first and second fiscal quarter recorded YoY increases of  13.9% and 8.5% respectively.

The non-GAAP adjusted EBITA, excluding share-based compensation expense, impairment of intangible assets and goodwill and certain other items, grew 2% YoY to RMB52.84 billioin, and diluted earnings per ADS decreased 2% YoY to RMB18.97. Net income attributed to ordinary shareholders crashed 69% YoY to RMB14.43 billion, which was primarily due to impairment of Sun Art, one of Alibaba’s first investments in the brick-and-mortar grocery space as part of its "new retail" strategy of taking physical stores online, and Alibaba’s video platform Youku.The impairment of intangible assets related to Sun Art recorded RMB12.08 billion in the December quarter, and impairment of good will that quarter surged 213% YoY to RMB8.49 billion, RMB2.71 billion out of which came from Youku.  

Taobao and Tmall Group, Alibaba’s top business segment that includes two major online marketplaces, generated RMB129.07 billion with a 2% YoY increase, and adjusted EBITA edged up 1% to RMB59.93billion. Alibaba said increase in EBITA mainly resulted from narrowing losses in certain businesses, partially offset by an increase in investments in content, user acquisition and retention of Taobao app, as well as technological innovation. It noted online gross merchandises value (GMV) achieved healthy YoY growth, with the number of transacting buyers and order volume growing strongly, in spite of decrease in average order value. Revenue from our China commerce retail business increased 1% YoY to RMB123.76 billion as customer management revenue (CMR) remained stable, driven by health growth of online GMV from Taobao and Tmall but partly offset by decline in overall take rate.  The overall take rate decreased slightly YoY mainly because the increase in GMV came from Taobao merchants. . The number of merchants operating on these platforms during the quarter continued to grow at double digits YoY, and such double-digit growth trend has sustained over the past four quarters.

Alibaba International Digital Commerce Group (ADIC) ascended to the second biggest segment by sales. The segment brought RMB28.52 billion, surging 44% YoY, and combined order soared 24% YoY. The strong performance was fueled by solid growth across all of AIDC’s retail platforms, especially from the cross-border AliExpress Choice business. AliExpress delivered over 60% YoY order growth, driven by Choice, which provides an enhanced experience to consumers by combining better product selection, price and quality with speed of logistics and great customer support. Choice represented about half of AliExpress’ total orders in January 2024 and continues to deliver rapid order growth.

Cloud Intelligence Group, the segment overtaken by ADIC, posted revenue of RMB28.07 billion with a 3% YoY increase. While revenue from Alibaba’s public cloud products and services experienced healthy growth, businesses excluding Alibaba-consolidated ones decreased YoY, primarily due to the decrease in revenue from low-margin project-based contracts as a result of continued effort to improve revenue quality

Alibaba CEO Eddie Wu pointed out the solid performance in the past quarter was achieved as his company is executing its focused strategies across the organization. “Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing. We will step up investment to improve users’ core experiences to drive growth in Taobao and Tmall Group and strengthen market leadership in the coming year. We will also focus our resources on developing public cloud products and sustaining the strong growth momentum in international commerce business,” Wu said.

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