Alibaba's Stock Falls as E-commerce Pressure Fuels Revenue Misses

Shares of Alibaba Group Holding Ltd. are trending downward in Thursday's premarket trading after the Chinese e-commerce giant reported lower-than-expected revenue, largely due to weaker performance in its core e-commerce platforms.

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For the fiscal first quarter, Alibaba reported a net income of 24.27 billion renminbi (approximately $3.3 billion), equating to 9.89 renminbi per American depositary share (ADS). This is a decline from the 34.33 billion renminbi, or 13.30 renminbi per ADS, reported in the same quarter last year.

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On an adjusted basis, Alibaba earned 16.44 renminbi per share, surpassing the 15.00 renminbi per share forecast by analysts surveyed by FactSet.

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Alibaba’s revenue for the quarter increased to 243.24 billion renminbi, up from 234.16 billion renminbi in the previous year. However, this figure fell short of the 248.32 billion renminbi that analysts had anticipated.

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Following the earnings report, Alibaba's U.S.-listed shares dropped by over 4% in early morning trading.

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A key area of concern was Alibaba's Taobao and Tmall e-commerce businesses, which generated 113.37 billion renminbi in revenue. This result was below analysts' expectations of 121.70 billion renminbi and also marked a decline from the 114.95 billion renminbi these platforms brought in during the same period last year.

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In a press release, Alibaba's Chief Executive Eddie Wu commented on the company's strategic focus, stating, "Our emphasis on enhancing user experience by offering quality products at attractive prices with excellent service has led to a stabilization in the market share of Taobao and Tmall Group."

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On a more positive note, Alibaba's cloud intelligence unit recorded a 6% increase in revenue, reaching 26.55 billion renminbi, which slightly exceeded the 26.07 billion renminbi expected by analysts. The company highlighted the "double-digit growth in public cloud" and the rising adoption of AI-related products as significant contributors to this segment's performance.

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Alibaba noted that its AI-related product revenue surged by triple digits compared to the previous year, and the company plans to continue investing in this area to maintain its market leadership.

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Additionally, Alibaba repurchased $5.8 billion worth of its shares during the June quarter, reflecting its commitment to returning value to shareholders.

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This mixed financial report, with strong growth in the cloud sector and AI-related products but underperformance in core e-commerce, reflects the broader challenges and opportunities facing Alibaba in the current economic environment.

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