Alibaba reported Q3 earnings yesterday morning before market open. Revenue was $29.12B vs. $29.44B expected, a 3% increase YoY. EPS was $1.82 vs. $1.7 expected. BABA 0.00 stock went up 5% yesterday but gave back most of the gains today and closed at ~$80, a 40+% decline YoY vs. QQQ 0.00 ‘s decline of 30% YoY.
Although the company’s operating EPS beat analysts’ expectations, Alibaba actually reported a net loss of $2.9 billion after it marked down the value of investments across a portfolio that include DiDi, Indonesia’s GoTo and many others. The company also green-lit a significant $15 billion expansion to an existing $25 billion buyback program and extended it to 2025.
The company expects Chinese authorities to ease the zero COVID policy and issues an optimistic outlook. CEO Daniel Zhang said:
We believe that Covid will ultimately pass, that our society, our economy, and our lives will eventually return to normal, and that the massive potential of China as the world’s second-largest economy will be further unleashed.
The rest of the world has already moved on from the COVID pandemic. It’s hard to predict what China will do for their COVID policy as it’s basically dictated by Xi Jinping after the 20th party congress. But I can’t imagine they keep the zero COVID policy. Chinese people simply couldn’t afford a half-open economy indefinitely.