Whatās Going On Here?Alibaba reported better-than-expected results on Thursday. What Does This Mean?Hereās the good thing about Alibaba: itās so big that at least one part of its business is bound to flourish come rain, shine, or government-mandated lockdown. This time, it was Taocaicai that came into its own, with the value of transactions on the fresh food platform booming more than 200% last quarter from the same time last year. And even though the rest of Alibabaās ecommerce segment had a slow April and May, it recovered in June thanks in part to Chinaās annual shopping festival. The companyās cloud computing business made the best of a tough few months too, posting a 10% uptick in sales even as the government cracked down on multiple online industries. So while Alibabaās revenue did fall marginally, investors knew it couldāve been much worse, and they sent its US-listed stock up 6%. Why Should I Care?Zooming in: Change of plan.
This was Alibabaās first drop in revenue on record, but analysts donāt necessarily think itāll become a habit. For one thing, Alibaba has recently promised to invest more in areas that are good for long-term growth. And for another, the Chinese government has realized itāll need to let up on its anti-tech crusade and boost economic support if it wants to achieve its increasingly unrealistic growth targets.
The bigger picture: SoftBank runs for the hills.
The US has threatened to delist a host of Chinese companies from its stock market after they failed to stick to its disclosure rules. And itās just added Alibaba to the line-up, which puts the company in a tight spot: a delisting would force some funds to sell its stock, which would send its share price tumbling. SoftBank doesnāt want to hang around to see that happen: the investment giant has reportedly started selling āforward contractsā that could see it dramatically reduce its stake in Alibaba over the next few years. | 