Alibaba said it is working on a rival to ChatGPT, the artificial intelligence chatbot that has caused excitement across the world. Alibaba said its own product is currently undergoing internal testing.
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Alibaba reported earnings for its fiscal third quarter that smashed expectations, sending U.S.-listed shares soaring 6% higher at 7:07 a.m. EST.
Here’s how Alibaba did in its fiscal third quarter, which ran from October to December 2022, versus Refinitiv consensus estimates:
- Revenue: 247.76 billion Chinese yuan vs 245.18 billion Chinese yuan expected, up 2% year-on-year
- Earnings per American depositary share (ADS): 19.26 yuan vs 16.26 yuan expected, up 14% year-on-year.
- Net income: 46.82 billion yuan vs 34.02 billion yuan, up 69% year-on-year.
Around $600 billion has been wiped off the value of Alibaba since its peak in October 2020, as a tightening regulatory environment on tech firms in China along with China’s strict Covid-19 control policies, and subsequent economic slowdown, hit the e-commerce giant.
Alibaba shares in Hong Kong on Thursday closed higher ahead of earnings, as investors bet that that China’s economic re-opening will help boost consumer sentiment and spending, which will ultimately help the e-commerce giant. During the December quarter, China abruptly ended its strict Covid controls such as lockdowns. However, this is not likely to be fully reflected in the quarter as it took place in December.
Revenue from Alibaba’s biggest business, the China commerce division, which includes its popular marketplace Taobao, totaled 169.99 billion yuan, down by 1% year-on-year. The drop was driven by a 9% year-on-year decline in customer management revenue, obtained from services such as marketing that Alibaba sells to merchants on its Taobao and Tmall e-commerce platforms.
Alibaba said that gross merchandise volume — or the value of transactions across the company’s online shopping platforms — “declined mid-single-digit year-over-year, mainly due to soft consumption demand and ongoing competition as well as a surge in COVID-19 cases in China that resulted in supply chain and logistics disruptions in December.”
The company said that it sees a rebound in China’s economy and consumption.
“Looking ahead, we expect continued recovery in consumer sentiment and economic activity,” Daniel Zhange, CEO of Alibaba, said in a press release.
Amid a slowdown in its China activity, Alibaba has sought growth in overseas markets through its South East Asia business Lazada and through global e-commerce site AliExpress. International commerce revenue grew 18% year-on-year to 19.47 billion Chinese yuan.
Meanwhile, the regulatory tightening that took place over the past two years is beginning to ease, as enforcement of regulation becomes more predictable.
Analysts are expecting Alibaba to see faster revenue growth over the coming quarters as the full effect of the Chinese economic re-opening is felt. Morgan Stanley named…
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