Alibaba Earnings: Q2 Results Miss Estimates But Retail Believes Firm’s Generating Good Cash In Tough Environment

Shares of Chinese e-commerce and technology giant Alibaba Group Holding (BABA) fell over 3.5% in Thursday’s pre-market trading after the firm’s second quarter results missed analyst estimates.

Alibaba reported a 4% year-over-year (YoY) rise in revenue at 243.24 billion RMB or $33.47 billion versus an estimate of $34.66 billion. Net income declined 27% YoY to 24.27 billion RMB compared to an expected 26.91 billion RMB.

Following the announcement, retail sentiment remained in the ‘bullish’ territory (67/100), albeit at a slightly lower score from a day ago, amid message volume hitting a year’s high.

Alibaba has been working hard on a turnaround with new chief executive Eddie Wu trying to revive both the firm’s e-commerce and cloud businesses.

The firm’s Taobao and Tmall Group recorded a 1% YoY decline in revenue to $15.60 billion while Cloud Intelligence Group managed a 6% YoY rise in revenue to $3.65 billion. With increasing competition from PDD Holdings, investors are concerned whether the tussle to retain market share would lead to a decline in the firm’s margins.

Notably, Alibaba’s operating margin fell to 15% in the second quarter from 18% in the year-ago period. The company attributed the drop in margins mainly to reversing a RMB6.90 billion share-based compensation expense in the quarter ending June 30, 2023, related to mark-to-market adjustment of Ant Group’s employee stock awards.

Alibaba repurchased a total of 613 million ordinary shares for a total of $5.80 billion during the quarter.

Bullish Stocktwits followers of Alibaba believe the firm is generating decent cash even in a tough economic environment and that share repurchases are expected to continue.