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Alibaba delivers earnings miss, shares slide

Wednesday, May 15, 2024

Today’s headlines

What’s happening: Shares of Alibaba Group Holding Limited fell on Tuesday, after the company reported its quarterly results.

What happened: The ecommerce giant managed to beat sales expectations in its fiscal fourth quarter.

However, Alibaba’s shares came under pressure after the company reported a sharp decline in profits.

How were the results: The Jack Ma co-founded company reported single-digit growth in sales in the quarter ending March 31.

  • Revenues grew by 7% year-over-year to $30.73 billion, beating the consensus estimates of $30.40 billion.
  • Adjusted earnings came in at $1.40 per share, falling short of Wall Street expectations of $1.41 per share.

Why it matters: Spending by Chinese consumers has not recovered significantly after the covid-19 impact. This has resulted in a slowdown in economic growth in the world’s second largest economy, weighing on the property sector.

Alibaba reported an 86% decline in profits for the fiscal fourth quarter, following valuation changes in its equity investments. Net income plunged to $453 million, while adjusted net income contracted by 11% year-over-year to $3.38 billion.

The company’s Taobao and Tmall Group revenues rose 4% year-over-year to $12.91 billion, while revenues from Alibaba International Digital Commerce Group surged 45% to $3.80 billion. Local Services Group revenues climbed 19% year-over-year to $2.03 billion, boosted by Ele.me and Amap.

Cloud Intelligence Group revenues grew 3% year-over-year to $3.55 billion, while revenues from Digital Media and Entertainment Group fell 1% to $685 million.

Alibaba repurchased 65 million shares in both the US and Hong Kong markets during the fourth quarter.

The company also announced a two-part dividend, which includes an annual dividend of $1 per share and a one-time extraordinary cash dividend of 66 cents per share.

“Our China and international commerce businesses realized double-digit year-over-year GMV (gross merchandise value) growth through our focus on the customer experience,” CEO Eddie Wu said.

How shares responded: On the US stock exchange, Alibaba’s shares dipped 6% to close at $79.51 on Tuesday, following the release of quarterly results. The stock has gained around 13% over the past month.

What to watch: Investors will monitor Alibaba’s plan to upgrade its secondary listing to a primary listing in Hong Kong. The company expects to complete this conversion by the end of August.

The markets today

The Canadian dollar will be in focus today ahead of a couple of major economic reports

Context: The CAD/USD forex pair edged higher on Tuesday as investors assessed the latest economic data.

Details: Data released on Tuesday showed wholesale sales in Canada declining by 1.1% in March, which came in lower than the initial reading of a 1.3% contraction. However, this followed a flat reading in the previous month and marked the sharpest decline since November 2023.

Car registrations in Canada rose to 172,104 units in March, from 136,622 units in the previous month.

Weakness in the US dollar lent support to the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.2% to 105.01 on Tuesday.

A decline in the price of crude oil, one of Canada’s major exports, limited the overall gains for the loonie. WTI crude oil for June delivery fell $1.10 to settle at $78.02 per barrel on Tuesday.

The CAD/USD forex pair added more than 0.1% to 1.3653 on Tuesday. The S&P/TSX Composite Index fell 0.07% to close at 22,243.34.

What to watch: Investors await the release of economic reports on housing starts and manufacturing sales from Canada today. Housing starts in Canada, which declined by 7% to 242,195 units in March, are expected to decline to 238,000 units in April.

Analysts expect Canada’s manufacturing sales to decline by 2.8% in March, following a 0.7% gain in the prior month.

Other Markets: European indices closed mostly higher on Tuesday, with the FTSE 100, CAC 40 and STOXX Europe 600 Index up by 0.16%, 0.20% and 0.15%, respectively, and the DAX 40 down by 0.14%.

The news shaping the markets

US Secretary of State Antony Blinken made a surprise visit to Kyiv, reassuring support for Ukraine. The news sent the RUB/USD pair lower in forex trading this morning.


The People’s Bank of China held its benchmark interest rate at 2.50%, lending support to the CNY/USD forex pair.


Australia’s wage price index rose by 4.1% year-over-year in the first quarter, versus a 4.2% gain in the prior quarter, which sent the AUD/USD pair higher in forex trading this morning.


Argentina’s consumer prices rose 8.8% in April. This marked an easing from the 11% rise recorded a month ago and lent support to the ARS/USD forex pair.


The API said US crude stockpiles fell by 3.104 million barrels in the week ending May 10, compared to a gain of 0.509 million barrels in the prior week, which sent WTI crude oil prices higher this morning.

What else to watch today

Saudi Arabia’s inflation rate and wholesale price inflation, France’s inflation rate, Turkey’s central government budget balance, Eurozone’s employment change, GDP growth rate and industrial production, South Africa’s retail sales, US MBA mortgage applications, consumer price index, NY Empire state manufacturing index, retail sales, business inventories, NAHB/Wells Fargo Housing market index, crude oil inventories, gasoline stocks change, distillate inventories,  net long-term TIC Flows, net purchases of US treasury bonds and notes, and net treasury international capital flows, Russia’s balance of trade and GDP growth rate, as well as India’s total passenger vehicle sales and balance of trade.


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