Alibaba's Strong Second Quarter

Alibaba's Strong Second Quarter

over 3 years ago2 mins

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Come at Alibaba, bro: the internet giant announced better-than-expected second-quarter earnings, even as its rivals try to knock it down a peg or two 🥊

What does this mean?

There’s a good reason Alibaba is known as China’s answer to Amazon: it likewise depends on bustling ecommerce and cloud computing segments for the majority of its income. It’s fortunate, then, that ecommerce's revenue – which has now fully recovered from the pandemic’s impact – was 34% higher than the same time last year, while cloud computing's was up 59% 👨‍💻 And just like long-time rival and second fiddle JD.com, Alibaba partly had a rise in customer numbers to thank for the revenue bump. That’s where the similarities stop, mind you: Alibaba boasts 742 million customers on its platform, while JD.com only has 420 million.

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Why should I care?

The second quarter’s shown that the biggest retailers in both the US and China have held up pretty well during the pandemic. But where Chinese retail sales data has recently fallen short of expectations, America’s spending is back to pre-pandemic levels 🛍 Still, at least neither’s in the UK’s position: sales are improving, sure, but several major retailers are reportedly hanging by a thread. Case in point: 136-year old retailer Marks & Spencer said this week it’d be cutting 7,000 jobs, while prestigious department store chain John Lewis announced plans to permanently shut eight of its stores.

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Hang Seng Indexes Company announced this month that it’ll be adding Alibaba’s recently locally listed shares to the key Hong Kong stock market index 🇭🇰 When it does, investors and exchange-traded funds that track the index will be forced to buy the ecommerce giant’s shares – which Goldman Sachs analysts reckon will create $1.2 billion worth of new investment. That might sound promising, but it won’t make much difference to its current $700 billion valuation.

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