Alibaba Shares Fall After Earnings Report
- Alibaba shares dip 4% in premarket after earnings miss expectations.
- The company faces headwinds in its core e-commerce business amid rising competition.
- Investors remain cautious due to slow growth and increasing competition.
Alibaba Group has reported disappointing financial results for the June quarter of 2024, missing both revenue and net income expectations. The company generated revenue of 243.24 billion Chinese yuan ($34.01 billion), falling short of the anticipated 249.05 billion yuan. Net income also declined to 24.27 billion yuan, below the expected 26.91 billion yuan. While revenue saw a modest year-on-year increase of 4%, net income plummeted by 29%, attributed to decreased operational income and increased investment impairments. The e-commerce giant is navigating a challenging landscape characterized by heightened competition and a cautious consumer base in China. Following a tumultuous 2023, which included a significant corporate restructuring and leadership changes, Alibaba is under the new direction of CEO Eddie Wu, who took over in September. Wu is focused on stabilizing the core China e-commerce business, which has been adversely affected by rivals like JD.com and PDD. In a strategic shift, Alibaba plans to emphasize third-party merchants on its platforms, Taobao and Tmall, while reducing its reliance on direct sales. Wu has indicated that new monetization features are in the pipeline, aiming to restore growth in the latter half of 2025. Despite a 1% decline in sales from the Taobao and Tmall group, Alibaba reported "double-digit" growth in gross merchandise value, suggesting that consumer engagement remains strong. On a positive note, Alibaba's international e-commerce ventures, including Lazada and Aliexpress, have shown robust performance, with sales in this division surging by 32% year-on-year, highlighting a potential area of growth amid domestic challenges.