Why Is Alibaba Stock Trading Lower Wednesday?

Alibaba Group Holding Limited BABA stock is trading lower Wednesday after it reported quarterly earnings and upsized its share buyback. 

The Jack Ma co-founded e-commerce giant reported third-quarter FY23 revenue growth of 5% year-on-year to $36.67 billion, marginally missing the consensus of $36.74 billion. Adjusted earnings per ADS of $2.67 missed the consensus of $2.69. 

Segments: Taobao and Tmall Group revenue grew 2% Y/Y to $18.18 billion. Alibaba International Digital Commerce Group revenue increased by 44% Y/Y to $4.02 billion. Local Services Group revenue grew by 13% Y/Y to $2.14 billion. 

Cainiao Smart Logistics Network Limited’s revenue increased 24% Y/Y to $4.01 billion. Cloud Intelligence Group grew by 3% Y/Y to $3.95 billion. Digital Media and Entertainment Group increased by 18% Y/Y to $710 million. All others revenue declined by 7% Y/Y at $6.62 billion.

Taobao and Tmall Group: Revenue from China’s commerce retail business grew by 1% Y/Y to $17.43 billion, led by Taobao and Tmall. 

Direct sales and other revenue grew by 2% Y/Y to $4.46 billion.

Alibaba International Digital Commerce Group: Revenue from International commerce retail business grew by 56% Y/Y to $3.28 billion, driven by the solid performance of all major retail platforms. 

During the quarter, AliExpress delivered over 60% Y/Y order growth, driven by Choice, Trendyol continued its robust double-digit order growth, and Lazada’s loss per order continued to narrow Y/Y.

Cloud Intelligence Group: It continues to improve revenue quality by reducing the revenue from project-based contracts with low margins. Revenues from public cloud products and services increased during this quarter. In January 2024, Alibaba Cloud unveiled its newest general-purpose ECS instance, g8i, to drive overall performance and AI inferencing capabilities.

Cainiao Smart Logistics Network Limited: Revenue from cross-border fulfillment solutions drove the growth. Cainiao expanded its premium 5-day delivery service coverage, adding two more countries during the quarter. The order volume for the premium 5-day delivery service achieved robust triple-digit quarter-over-quarter growth.

Digital Media and Entertainment Group: Strong revenue growth of Alibaba Pictures’ offline entertainment businesses drove the change. Damai, a subsidiary of Alibaba Pictures, consolidated its industry-leading position by servicing almost all the major concerts in China, contributing to rapid GMV growth Y/Y. The total box office of movies produced, promoted, and distributed by Alibaba Pictures’ movie segment accounted for more than half of China’s total box office.

Buyback: The board approved an increase of up to $25 billion in its share repurchase program through the end of March 2027.

Price Action: BABA shares traded lower by 3.43% at $75.55 premarket on the last check Wednesday.

Alibaba Photo by zhu difeng on Shutterstock