Alibaba: Earnings Strong, Stock Down

Alibaba: Earnings Strong, Stock Down

almost 4 years ago2 mins

Ecommerce giant Alibaba flashed its trademark smile after reporting better-than-expected results late last week – only to turn that upside-down frown upside down again when its share price dropped 4% ☹️

What does this mean?

With coronavirus lockdowns encouraging more people to shop online for the essentials, the Chinese company’s revenue increased 22% in the first three months of the year. And while supply-chain disruptions did hit some of its sellers, Alibaba said it’s seen a steady recovery since March 📊 Then again, Alibaba’s definition of “recovery” probably differs from most other companies’: a record-breaking trillion dollars’ worth of merchandise flowed through its platform in the past year alone.

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But first-world or not, Alibaba does have problems: the company’s major investments in stocks like ride-hailing company Lyft and Chinese social media platform Weibo have soured due to the coronavirus-induced market slump. Its quarterly profit would’ve increased by 11% if not for those losses, but as it was, that profit fell almost 90% 😱

Why should I care?

Despite the better-than-expected results, Alibaba’s Hong Kong-listed stock dropped almost 4%. It fell victim to a wider sell-off in Hong Kong stocks after China’s announcement that a national security law would be imposed on the city, limiting its freedom 🇭🇰 The move – which could trigger both a new wave of protests and a flare-up of tensions with the US – caused one measure of Hong Kong stocks to head for its worst daily drop since the 2008 financial crisis.

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The US president has already threatened to retaliate if China goes ahead with the law, stoking already-simmering tensions between the two superpowers 🔥 Just last Wednesday, for example, the US Senate passed a bill that would bar Chinese companies from listing on US exchanges – and even go as far as to delist existing ones like Chinese tech companies Baidu and, you guessed it, Alibaba.

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