Alibaba Stock (Ticker: BABA) had an interesting year. After raising more than 70% since March of 2020, it sharply fell down 30% because of the antitrust probe news in China. Now Alibaba reports strong sales and stock price surges again.
“Although the changing regulatory landscape applicable to fintech and internet platform companies presents near-term challenges to Alibaba, we regard them as important opportunities for reassessing and improving our business practices,” Chief Executive Officer Daniel Zhang said.
Alibaba and its fintech-affiliate Ant Group Co. have come under scrutiny after Mr. Ma made a speech in October criticizing Chinese President Xi Jinping’s campaign to combat financial risks as well as regulators for stifling innovation. That led Mr. Xi to personally call off Ant’s much-anticipated initial public offering.
Since his October comments, Mr. Ma has largely vanished from public life. He resurfaced briefly in January, appearing in a video to give a speech to a group of teachers from rural schools. While the Chinese billionaire stepped down as executive chairman of Alibaba in 2019, his appearance sent the company’s share prices up more than 8% that day.
Even as Alibaba faced regulatory scrutiny, its earnings for the fiscal third quarter ended in December exceeded analysts’ expectations. Net income attributable to ordinary shareholders was 79.43 billion yuan, equivalent to $12.28 billion, up 52% from the same period a year earlier, on strong consumer activity amid an economic rebound in China.
Sales for the quarter rose about 37% to 221.08 billion yuan, ahead of the 214.29 billion yuan analysts polled by FactSet had expected. Core commerce sales rose 38% to 195.54 billion yuan. Alibaba, running two of China’s biggest online shopping sites, is often seen as a barometer for Chinese consumer spending.
Meanwhile, Alibaba’s report showed that Ant recorded 14.5 billion yuan, equivalent to $2.24 billion, in estimated net profit in the three months to September 2020, before its blockbuster initial public offering was called off in early November. Alibaba owns a third of Ant and reports its share of profits from the owner of Alipay one quarter in arrears.
Ant earlier reported 45.6 billion yuan in revenue for the September quarter while it was preparing to go public last year, but didn’t disclose the profit figures. Chinese financial regulators recently told Ant to restructure into a financial holding company, essentially subjecting Ant’s fast-growing businesses to tighter regulations, The Wall Street Journal reported last week.
Alibaba’s business has benefited from a strong economic recovery, as China has returned to work following the Covid-19 pandemic but continued a trend of purchasing goods online. China was the only major world economy to grow last year, expanding by 2.3% after a historic contraction in the early months of the year.
The company’s cloud-computing business notched its first quarter of positive adjusted earnings before interest, taxes and amortization as revenue grew 50% to 16.12 billion yuan. Revenue from its logistics business, Cainiao Network, grew 51% year over year.
Record sales from the Nov. 11 annual shopping festival, known as Singles Day, helped. Alibaba raked in the equivalent of a record $74.1 billion by the end of Nov. 11, after extending the event from one to 11 days.
And as soon as Ant’s IPO will be on Track Alibaba stock should benefit greatly. IPO’s last year have performed incredibly well. ANT IPO should have been one of the largest between them but was halted. But it is inevitable that IPO will happen at some point and logically a big part of that IPO money will be going to Alibaba as an owner of 3rd of the company.
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