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Alibaba shares slide as earnings miss overshadows $25 bln buyback

Published 02/07/2024, 09:35 PM
© Reuters

Investing.com-- Hong Kong shares of Alibaba Group (NYSE:BABA) (HK:9988) fell sharply on Thursday as worsening conditions in China saw its fourth-quarter earnings miss expectations, while a $25 billion increase in its share repurchase program did little to inspire confidence. 

Alibaba slid 5.2% to HK$71.0 by 20:59 ET (01:59 GMT), and dragged the broader Hang Seng index 0.6% lower. Alibaba rival JD.com (NASDAQ:JD) (HK:9618) was flat in Hong Kong trade, as were Chinese tech peers Baidu (NASDAQ:BIDU) (HK:9888) and Tencent Holdings Ltd (HK:0700).

The firm’s American depository receipts also slid 5.9% in overnight trade.

Alibaba’s earnings per share for the December quarter were RMB18.97, missing analyst estimates of RMB 19.17, while revenue was RMB 260.35 billion, just missing expectations of RMB 260.65 billion.

The earnings misses came largely from slower revenue increases in the group’s flagship Taobao and Tmall Group, as consumer demand in China remained weak. 

The group is also facing increased competition from newer entrants to the online retailing space, particularly PDD Holdings' (NASDAQ:PDD) Pinduoduo . PDD recently overtook Alibaba as China’s most valuable e-commerce company. 

But retailers in China are facing an increasingly dire environment, as persistent economic weakness in the country chipped away steadily at discretionary spending. Data released on Thursday showed Chinese consumer price index inflation grew less than expected in January despite a bump-up in holiday spending, as consumers remained largely cautious.

Alibaba announced a $25 billion increase to its share repurchase program till 2027 to help shore up sentiment. But the move had so far appeared to have provided little support to the stock. 

Alibaba’s cloud business also came under pressure from increased competition, and was still reeling from the impact of a bitter price war over the past two years. The group had recently scrapped plans to spin off the business, citing uncertainties over chip supply following U.S. restrictions on tech exports to China. 

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