2022 – Alibaba’s strong earnings show that Chinese consumers are still spending

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E-commerce giant Alibaba on Thursday reported better-than-expected earnings and sales for the fourth quarter.

Arrow Ali Baba (Baba) It rose nearly 15% in late morning trading after the company reported a 9% rise in revenue from a year earlier, topping analysts’ expectations. Alibaba said the strength was driven by strong demand for online and mobile shopping, as well as a 12% jump in revenue from its massive Alibaba Cloud unit.

Alibaba said it now has more than 1 billion active customers in China, the first time the company has exceeded this milestone. Alibaba has more than 1.3 billion customers around the world.

Alibaba was able to report strong results “despite macroeconomic challenges affecting supply chains and consumer sentiment,” Alibaba Sharman and CEO Daniel Zhang said in a press release.

The company hopes the supply chain disruptions will end soon. “We definitely see signs of improvement in May,” said Toby Xu, Alibaba’s chief financial officer, during a conference call with analysts on Thursday, although delivery of suspended shipments will take “some time.”

Xu added that “many merchants may need to invest to increase their revenue,” especially as retailers prepare for Alibaba’s mid-year shopping festival on June 18.

Changing the shopping habits of Chinese consumers

Concerns about the emergence of Covid in major Chinese cities remain a major concern. This has made how (and what) Chinese consumers shop similar to what they do in the United States and other parts of the world.

“While our user traffic and engagement have remained stable, consumption patterns have changed across categories across our platforms,” Zhang said on a conference call.

He noted that sales in the fashion and electronics categories fell, but that “demand for basic commodities” such as groceries and personal care products “has increased significantly with more consumers stocking at home.” Other categories such as healthcare, sportswear and outdoor products have also grown rapidly, Zhang said.

Major US retailers like Walmart (WMT) And the targeting (TGT) Similar trends have been reported.

But Alibaba faces other big challenges. Regulators in China are taking a closer look at the local tech giants in recent years. Many large Chinese companies trading in the US may be forced to delist from the New York Stock Exchange and Nasdaq.

Best Deal Maker says Chinese Markets
The Ridesharing Didi app is available. Luckin Coffee, a competitor Starbucks (SBUX)It has already been written off, although the company has made an impressive comeback in China after accounting problems.

Tensions between China and the United States remain high. President Biden continued to talk harshly about possible military intervention in China if it attacked Taiwan.

However, Biden and US Treasury Secretary Janet Yellen have indicated that they will work to roll back some of the tougher Trump-era tariffs on Chinese goods.

Other major Chinese companies have also reported more positive results recently. Alibaba competitor JD.com (Dinar) He said recently that fourth-quarter sales beat expectations. And the Chinese search giant Baidu (Baidu) On Thursday, it reported better-than-expected results thanks to growth in its cloud and artificial intelligence units.
Baidu’s shares were up 10% Thursday. But the stock is still down more than 10% for the year. Alibaba, JD and other top Chinese technology as online retailers Bindu (PDD) and electric car companies number (Start)Xpeng and Li Auto are still down sharply in 2022 despite recent spikes.

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