Alibaba Ends the Retail Week By Beating Estimates

(IAM Newswire via Comtex)

COVID-19 casted a cloud over the global economy, but e-commerce is one of the lucky sectors that got some sunshine through those heavy clouds. Already on Wednesday, the largest e-commerce company in China by volume, Alibaba (NYSE:BABA) announced that the number of transactions on its platform rose 100% in April with the number of US active buyers expanding as much as 76%. These trends mark an even more positive growth than pre-pandemic trends. With its fourth quarter results that were reported before markets opened on Friday, it even managed to beat estimates causing its stock to rise during premarket hours as a reward to portraying a steady recovery.

Earnings report

Adjusted earnings from $1.30 per share increased from $1.28 from the same period last year, exceeding Wall Street estimates of 85 cents. This was the result from a 22% increase in top lines as revenues increased to $16.14 billion, also topping estimates of $15.1 billion. And if we specifically look at the cloud segment, cloud computing revenue skyrocketed 58% from a local currency perspective. Overall, earnings unexpectedly rose on more than solid revenue growth.

Expansion into cloud computing, IoT and AI

Now we know why China's largest online retailer is growing its footprint into cloud computing as it devoted a sum of $28 billion to be invested over the next three years.

Despite short-term losses that are bound to occur in the near future, there is the promise of long-term gains as the company expands into these segments, as well advertising and entertainment and the $1.4 billion in Artificial Intelligence and IoT.

Signs of recovery in Chinese e-commerce

Alibaba’s March quarter results portrayed the resiliency of Alibaba’s ecosystem, and the potential for its wide array of other services. The so-called week of retail has ended on a bright note, with Walmart (NYSE:WMT) and Target (NYSE:TGT) that retail has most certainly not been killed off by this storm although the sales push did come at a cost of profits. Even heavily hit TJX Companies Inc (NYSE:TJX) are starting to see strong initial sales after reopening stores at the beginning of the month so better times seem to be ahead. Walmart is also among the lucky ones as its profitability didn't suffer with its earnings rising but Alibaba is ahead of them all as China is showing clear signs of recovery whereas US economy has more COVID-19 turbulence ahead.

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