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Alibaba saw a decline in the value of transactions on the online shopping platforms during the fiscal Q3.
Chinese e-commerce company Alibaba Group (NYSE: BABA) crushed expectations in its fiscal Q3, which ended on December 31. The company recorded revenue of 247.76 yuan, equaling $35.92 billion. Meanwhile, analysts expected Alibaba to see 245.18 billion yuan in revenue for the fiscal Q3. As news of the e-commerce giant hits the limelight, its US-listed shares popped 6%. The Chinese multinational technology company has grown by almost 7% since the beginning of the year. It has also increased by 19.95% in the last three months. At press time, however, Alibaba’s US-listed shares are down 0.20% to $93.97 in extended trading hours.
Alibaba Posts Fiscal Q3 Financial Performance
Alibaba posted a 14% YoY rise in its earnings per American depository share at 19.26 yuan. This is 3 yuan more than analysts’ prediction of 16.26 yuan. The company’s net income for the quarter was 46.82 billion yuan. In addition to exceeding the expected 34.02 billion yuan, the figures also grew 69% compared to the year-ago quarter.
Additionally, revenue from the company’s commerce division, including the online shopping platform Taobao, dropped 1% YoY to 169.99 billion yuan. A 9% YoY fall in customer management revenue contributed to the commerce sector revenue drop. At the same time, Alibaba saw a decline in the value of transactions on the online shopping platforms during the fiscal Q3.v The Chinese company explained that the gross merchandise volume “declined mid-single-digit year-over-year, mainly due to soft consumer demand and ongoing competition as well as a surge in COVID-19 cases in China that resulted in supply chain and logistics disruptions in December.”
Generally, the e-commerce giant suffered a significant hit due to the unprecedented global health crisis. Many organizations shut down as the world was forced to stay at home. The tight COVID-19 control policies and strict regulations on Chinese technology companies resulted in Alibaba losing a significant part of its value. Since the company peaked in October 2020, it has lost about $600 billion from its valuation.
Investors Are Hopeful on Potential Recoveries
While Alibaba saw its shares jump in the US after announcing the fiscal Q3 earnings, its shares in Hong Kong closed higher before the news. The e-commerce closed higher on Thursday before the announcement of the financial results. This is because investors are bullish on potential recoveries due to China’s economic reopening. The government lifted the strict Covid controls during the December quarter, and investors are betting it could fuel consumer spending. And e-commerce companies, including Alibaba, are positioned to benefit from increased consumer sentiment and spending. CEO Daniel Zhang stated that the company looks forward to “continued recovery in consumer sentiment and economic activity.”