Alibaba shares fall 7% after the Chinese tech giant posts 86% drop in profit

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Alibaba said it is working on a rival to ChatGPT, the artificial intelligence chatbot that has caused excitement across the world. Alibaba said its own product is currently undergoing internal testing.
Kuang Da | Visual China Group | Getty Images

Alibaba posted a beat on revenue in its fiscal fourth quarter ended March, even as the Chinese e-commerce giant’s net profit plunged sharply.

Here’s how Alibaba did in the March quarter versus LSEG consensus estimates:

  • Revenue: 221.9 billion Chinese yuan ($30.7 billion) versus 219.66 billion yuan expected.

Net income attributable to ordinary shareholders came in at 3.3 billion yuan, down 86% year-on-year.

Shares of Alibaba were around 3% lower in pre-market trade in the U.S.

Alibaba had a rocky year in 2023, when it carried out its largest-ever corporate structure overhaul. It also separately implemented several high-profile management changes, with company veteran Eddie Wu taking over the reins as chief executive in September.

The Chinese tech giant said earlier this year that it increased its share buyback program by $25 billion through the end of March 2027, in a bid to signal confidence to shareholders.

Alibaba has been grappling with cautious consumer spending in China, but saw signs of a slight recovery in its core e-commerce business in the March quarter.

Revenue for the Taobao and Tmall division, which houses Alibaba’s China e-commerce business, rose 4% year-on-year to 93.2 billion yuan. That was faster than the 2% growth in the previous quarter.

Customer management revenue, which are sales received from services such as marketing that Alibaba sells to merchants on its Taobao and Tmall e-commerce platforms, rose 5% year-on-year, after coming in flat in the previous quarter.

Alibaba’s international commerce business logged a revenue increase of 45% year-on-year to 27.4 billion yuan. The Hangzhou-headquartered company has been ramping up its overseas push amid a domestic slowdown, where Alibaba has faced rising competition from low-cost players like PDD. Earlier this year, CEO Wu vowed to “reignite” growth in the e-commerce firm with further investments.

There appears to be early signs of that taking hold in the March quarter.

“This quarter’s results demonstrate that our strategies are working and we are returning to growth,” Wu said in the earnings release.

The profit drop casts a long shadow on the earnings. Alibaba said the reason for the fall is “primarily attributable to a net loss from our investments in publicly-traded companies during the quarter, compared to a net gain in the same quarter last year, due to the mark-to-market changes.”

This is a breaking news story. Please check back for more.

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