Alibaba stock rallies on handsome profit beat, optimistic commentary

Alibaba stock rallies on handsome profit beat, optimistic commentary

Alibaba stock rallies on handsome profit beat, optimistic commentary

Internet giant Alibaba saw its revenue growth slow in the final three months of a year ago, in quarterly results likely to stir up concerns over the weaker China market, recently signalled to by U.S. tech giants.

To be sure, Alibaba's revenues are still eye-popping by most standards: revenue for the quarter ended December 31, 2018 was 117.28 billion yuan (US$17.06 billion), an increase of 41 percent over the same period in 2018.

The results of the company display strength in the country's consumer economy that is being driven by an increasing base of affluent young consumers. The cloud computing business continued at a strong growth rate, up 84 percent to revenues of CNY 6.61 billion, while digital media and entertainment slowed slightly to a 20 percent annual increase to CNY 6.49 billion.

The positive result by Alibaba which is the first of China's internet giants to report its earnings may bring a much-needed boost to China's slowing economy. He said that people are overly anxious about the impact it'll have on China's economy. This compared with analysts' view of 21.28 billion yuan, according to I/B/E/S estimates from Refinitiv. Alibaba's stock was up more than 6 percent at market close on Wednesday.

Last year, the economic growth of China slowed to its weakest in almost 30 years, with the growth expected to decline even further in 2019.

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Alibaba beat on earnings, but missed on sales.

Chinese consumers are still fundamentally very strong and consumption is going to grow over the next 5-10 years, he added.

On Tuesday, China's Ministry of Industry and Information Technology (MIIT) said revenue growth rates for domestic technology companies did not rise in 2018, and that consumer spending had slowed amid increased economic pressures.

The results propelled the shares of NY listed Alibaba to gain more than 6%, to US$166.82.

As some US companies blame China's economy for their earnings misses, China's Alibaba has offered some upbeat notes about the world's second-largest economy amid growing concerns of a slowdown. But concerns over China's macroeconomic conditions are growing.

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