Whatās Going On Here?Come at Alibaba, bro: the internet giant announced better-than-expected second-quarter earnings, even as its rivals try to knock it down a peg or two. What Does This Mean?Thereās a good reason Alibaba is known as Chinaās answer to Amazon: it likewise depends on bustling ecommerce and cloud computing segments for the majority of its income. Itās fortunate, then, that ecommerceās revenue ā which has now fully recovered from the pandemicās impact ā was 34% higher than the same time last year, while cloud computingās was up 59%. And just like long-time rival and second fiddle JD.com, Alibaba partly had a rise in customer numbers to thank for the revenue bump. Thatās where the similarities stop, mind you: Alibaba boasts 742 million customers on its platform, where JD.com only has 420 million. Why Should I Care?The bigger picture: British re-failers.
The second quarterās shown that the biggest retailers in both the US and China have held up pretty well during the pandemic. But where Chinese retail sales data has recently fallen short of expectations, Americaās spending is back to pre-pandemic levels. Still, at least neitherās in the UKās position: sales are improving, sure, but several major retailers are reportedly hanging by a thread. Case in point: 136-year old retailer Marks & Spencer said this week itād be cutting 7,000 jobs, while prestigious department store chain John Lewis announced plans to permanently shut eight of its stores.
For markets: Investors are coming, look busy.
Hang Seng Indexes Company announced this month that itāll be adding Alibabaās recently locally listed shares to the key Hong Kong stock market index. When it does, investors and exchange-traded funds that track the index will be forced to buy the ecommerce giantās shares ā which Goldman Sachs analysts reckon will create $1.2 billion worth of new investment. That might sound promising, but it won't make much difference to Alibaba's current $700 billion valuation. | 