The Chinese consumer continues to spend – that’s what Alibaba’s latest earnings indicate. China’s biggest e-commerce company’s logged its highest rate of revenue growth in four quarters.
Alibaba\'s sales for Q1 up 39 percentAlibaba’s latest earnings indicate Chinese consumers are continuing to spend. China’s biggest e-commerce company’s logged its highest rate of revenue growth in four quarters.
Sales for the first three months of 2016 rose 39 percent, year over year, to $3.75 Billion – beating expectations as its core online shopping business continues to grow.
But profits themselves missed expectations – falling for the first time. Alibaba fell short on adjusted earnings-per-share, coming in at 47 cents. Analysts were expecting around 55 cents.
That was mostly due to Alibaba’s aggressive acquisition spree and investments in new businesses, including a food delivery and media company.
Gross merchandise volume, the total of goods transacted on its platform, climbed 24 percent year over year to $115 billion. Transactions through mobile devices accounted for 73 percent of that.
The big take away: Although the Chinese economy’s growth has been slowing, Alibaba’s results indicate that the Chinese consumer is resilient and still doing a lot of shopping.
And CEO Zhang says Alibaba is on track to realizing its vision of hitting 2 billion consumers and $1 trillion in total merchandising volume by 2020.
To do that Alibaba needs to expand beyond China. To that end, Alibaba purchased Southeast Asian online retailer Lazada Group for roughly $1 billion.
Alibaba has spent over half a billion dollars getting stakes in Indian tech companies, like mobile payment provider PayTM and e-commerce site Snapdeal.
So it seems Jack Ma has his sights set on India as his next big market. Investors like that, as shares were up 4 percent to $78.83 on Thursday.
Dan McClory on Alibaba’s latest earnings
For more on Alibaba, we were joined by Dan McClory, Managing Director at Bonwick Capital Partners.