Alibaba's share price was down more than eight per cent in pre-market trading today as the Chinese etailing giant released below-expectations quarterly figures.
Revenues in the three months to December 31 rose 40 per cent to $4.2bn (£2.8bn), while income was up just six per cent to $1.5bn. Analysts were expecting revenues to come in at $4.45bn, according to Thomson Reuters.
Ebitda rose 34 per cent to $2.4bn, with gross margins at 58 per cent.
Net income actually fell 28 per cent to $964m, primarily because of “an increase in share-based compensation expense, a one-time charge for financing-related fees and an increase in income tax expenses” during the period.
Why it's interesting:
It's probably easier to say why it isn't interesting. But here goes.
Alibaba is a key stock for exposure to China, with investors clambering to get in on its IPO – the biggest in history - back in September.
But as a retail business it is obviously going to be affected by any slowdown in the economy if the middle class starts getting more cautious.
It also suggests that the Chinese equivalent of Black Friday - Single's Day, which was trumpeted as a huge deal for the business - may not have yielded as much incremental growth as was thought.
Although the share price looks set to open several points lower than it closed yesterday, shareholders who invested at the point of IPO are still sitting pretty – but not by that much. The surge experienced in early autumn has slowly tailed off since mid-November.
And what does this all mean for Jack Ma, Asia's richest man? He will need the share price to nudge back up if he is to retain that hotly contested title.
What Alibaba said:
Chief executive Jonathan Lu was chipper, noting that gross merchandise volume (GMV) in China grew 49 per cent, with the number of Alibaba's annual active buyers rising 45 per cent to 334m.
“Our business continues to perform well, and our results reflect the strength of our ecosystem and the strong foundation we have for sustainable growth,” he said.
Chief financial officer Maggie Wu added: “Alibaba performed very well this quarter, with revenue growing 40 per cent year on year. We continue to execute our focused growth strategy, and the fundamental strength of our business gives us the confidence to invest in new initiatives to add new users, improve engagement and customer experience, expand our products and services and drive long-term shareholder value.”
Growth is strong, even if it's not as strong as analysts forecast.