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Key Takeaways
- Alibaba reported holiday quarter earnings and revenue that fell short of estimates as e-commerce and cloud sales slowed.
- Results were negatively impacted by impairment charges for its Youku streaming service and Sun Art supermarket chain.
- ADRs tumbled following the news, even as Alibaba announced it was adding $25 billion to its stock buyback program.
American depositary receipts (ADRs) of Alibaba (BABA) tumbled close to 6% in early trading Wednesday after the Chinese e-commerce giant’s holiday results missed expectations even as it raised its stock buyback program.
Alibaba reported fourth quarter earnings per share (EPS) of 18.97 Chinese yuan ($2.67), with revenue rising 5% from a year ago to 260.35 billion yuan ($36.6 billion). Both were below forecasts.
Total net income tumbled 77%, which the company explained was “primarily attributable to mark-to-market changes from our equity investments and the decrease in income from operations” related to the impairment charges taken for its video streaming service Youku and supermarket chain Sun Art.
Sales slowed at the company’s Taobao and Tmall online retail sites, as well as its cloud computing group, which were up just 2% and 3%, respectively.
CEO Eddie Wu noted that going forward, Alibaba’s top priority would be “to reignite the growth of our core businesses, e-commerce and cloud computing.”
CFO Toby Xu announced that the company was increasing its share repurchase program by $25 billion, “demonstrating our confidence in the outlook of our business and cash flow.” That boosts the buyback to a total of $35.3 billion through the end of 2027.
Alibaba ADRs were 5.9% lower at $73.64 as of about noon ET Wednesday. They’ve lost close to one-third of their value over the past year.
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