World · August 6, 2022

Alibaba records flat revenue growth for the first time

Shares of the Chinese tech and e-commerce giant were up more than 6% in pre-market trading in New York on Thursday. Its Hong Kong stock had previously closed up 5.2%.

The success came despite the company reporting revenues of nearly 205.6 billion yuan (about $ 30.4 billion) in the quarter ended June, roughly in line with the same period last year.

But that exceeded analysts’ forecasts and net profit was also better than expected, at 22.7 billion yuan ($ 3.4 billion).

Alibaba (BABA)which owns the hugely popular online shopping platforms Taobao and Tmall, was not immune from the economic pain of the Covid-19 blockade across China earlier this year.

The company said its retail sales plummeted in April and May, particularly as Shanghai and other major Chinese cities faced crippling pandemic restrictions that sank consumer demand and created logistical nightmares.

But since June, activity has resumed, notably “as the logistics and supply chain situation gradually improved after the easing of Covid restrictions,” said CEO Daniel Zhang.

Alibaba stock slides to Hong Kong after the threat of US delisting
In a conference call on Thursday, Zhang said the company has seen glimpses of recovery in categories like fashion and electronics, which have been hit hard before.

Although growth has practically stopped, Zhang tried to give a good interpretation to the latest results, noting that the company had overcome “weak economic conditions” to “provide stable revenues”.

However, it warned of a rocky road ahead, pointing to broader economic risks.

“External uncertainties, including but not limited to international geopolitical dynamics, the resurgence of Covid and China’s macroeconomic policies and social trends, are beyond what we as a company can influence,” Zhang told analysts.

“The only things we can do right now is focus on improving ourselves,” he said, adding that Alibaba has focused on reducing losses in businesses such as its supermarkets and food delivery units.

But Alibaba has been addressing bigger issues lately, most notably after adding it to a key US Securities and Exchange Commission checklist last Friday. Similar to other Chinese firms, the move puts the tech titan at risk of being kicked off Wall Street if U.S. auditors can’t fully inspect his financial statements.
Alibaba shares rise after announcing Hong Kong's main listing

Alibaba has long had a primary listing in New York, where its shares were traded in a massive IPO in 2014.

Now, it looks like he’s spreading his bets. Last week, the company announced plans to upgrade its Hong Kong secondary listing to a major listing. The change could take place later this year and would allow more mainland Chinese investors to access the stock.

This comes just as one of Alibaba’s biggest longtime supporters is seen to be pulling out.

The Financial Times reported Thursday Soft bank (SFTBF) it had “sold more than half” of its holdings in the Chinese company, citing forward sales statements seen by the newspaper.

SoftBank did not immediately respond to a request for comment.