Chinese e-commerce giant Alibaba announced earnings for the quarter ending on June 30th. Even though net profit was higher than expected, sales were lower than Wall Street expectations. The stock dropped six per cent following the announcement.
Revenue grew 32 per cent in the first quarter to £2.09 billion, lower than Wall Street’s £2.17 billion forecast. Alibaba was forced to stop online lottery sales and reduce fees for group-buying and flash sales, chopping four per cent off potential revenue.
Alibaba reported 148 per cent growth in profit to £3.18 billion. The increase in profit comes from the splitting Alibaba Pictures.
The Chinese yuan price drop and slowing economic conditions inside of China are making investors worried for the future of Alibaba. Analysts also question how Alibaba will be able to push out of China, into the United States and Europe.
Alibaba showed strong growth in mobile purchases, but a lower price per sale. Alibaba cited sales on mobile as the reason for the lower sale price, with mobile customers tending to spend less than desktop customers.
Over 300 million customers purchase items on mobile through Alibaba’s Taobao and Tmall online shopping services. It did not split the phone/tablet sales.
There will also be a £2.5 billion share buyback program hosted by Alibaba. The current value of the e-commerce giant is £123 billion, about £30 billion behind Amazon’s £157 billion valuation.