Alibaba just posted flat revenue growth for the first time since becoming a public
company, but investors don’t seem to mind.
Shares of the Chinese tech and e-commerce giant jumped more than 6% in premarket
trading in New York on Thursday. Its stock in Hong Kong had earlier closed up 5.2%.
The pop came despite the company reporting revenue of nearly 205.6 billion yuan
(about $30.4 billion) in the quarter ended June, roughly in line with what it recorded
the same time last year.
But that topped analysts’ forecasts, and net income was also better than expected, at
22.7 billion yuan ($3.4 billion).
Alibaba, which owns the hugely popular Taobao and Tmall online shopping
platforms was not immune from the economic pain of Covid-19 lockdowns across
China earlier this year.
The company said its retail sales slumped in April and May, particularly as Shanghai
and other major Chinese cities dealt with crippling pandemic restrictions that
scuttled consumer demand and created logistical nightmares.
But since June, business has picked back up, particularly “as logistics and the supply
chain situation gradually improved after Covid restrictions eased,” said CEO Daniel
Zhang.
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On a conference call Thursday, Zhang said the company had seen glimmers of
recovery in categories like fashion and electronics, which were hit hard earlier on.
Despite growth virtually skidding to a halt, Zhang sought to put a good spin on the
latest results, noting the company had overcome “soft economic conditions” to
“deliver stable revenues.”
However, he warned of a rocky road ahead, pointing to wider economic risks.
“The external uncertainties, including but not limited to international geopolitical
dynamics, Covid resurgence, and China’s macroeconomic policies and social trends,
are beyond what we as a company can influence,” Zhang told analysts.
“The only things we can do at this moment is to focus on improving ourselves,” he
said, adding that Alibaba had focused on narrowing losses across businesses such as
its supermarket and food delivery units.
But Alibaba has faced more significant questions lately, particularly after its addition
to a key US Securities and Exchange Commission watchlist last Friday. Similar to
other Chinese firms, the move puts the tech titan at risk of being ejected from
Wall Street if US auditors can’t fully inspect its financial statements.
Alibaba has long had a primary listing in New York, where its shares have traded
since a massive IPO in 2014.
Now, it appears to be spreading its bets. Last week, the company announced plans to
upgrade its secondary listing in Hong Kong to a primary listing. The change could
take place by the end of this year and would give more mainland Chinese investors
access to the stock.
That comes just as one of Alibaba’s biggest longtime backers is seen to be pulling
back.
The Financial Times reported Thursday that SoftBank had “sold more than half” of
its holdings in the Chinese company, citing filings of forward sales seen by the
newspaper.
SoftBank did not immediately respond to a request for comment.
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