Why Alibaba Stock Tanked Today

Alibaba (NYSE: BABA) released its latest set of quarterly results late Wednesday, and investors reacted by trading the big Chinese company’s stock down the following day. Across that trading session the price of its American depositary shares (ADSes) declined by almost 4%, against an essentially flat-lining S&P 500 index.

Fourth-quarter revenue rose, adjusted net income dipped

For its fourth quarter, Alibaba posted total revenue of just over 260.3 billion yuan ($36.56 billion), which was up by 5% year over year. According to non-GAAP (adjusted) standards, it netted slightly under 48 billion yuan ($6.7 billion), representing a 2% dip from the same quarter of 2022. On a per-ADS basis, that adjusted net income figure was 18.97 yuan ($2.66).

Neither headline figure met analyst expectations. On average, the prognosticators tracking the sprawling tech stock were modeling a slightly higher top-line result of nearly 260.7 billion yuan ($36.61 billion) and an adjusted, per-ADS net income of 19.17 yuan ($2.69).

In the quarter, the largest of Alibaba’s business units — the Taobao and Tmall domestic e-commerce operations — saw its revenue rise by a fairly anemic 2% to almost 123.8 billion yuan ($17.4 billion). It had more success with the international digital commerce group that runs the popular AliExpress online retail site, however even with 44% year-over-year growth its tally was relatively low at less than 20 billion yuan ($2.8 billion).

The $25 billion added to stock buyback authorization didn’t impress

Alibaba didn’t proffer any guidance in the earnings release. It did, however, briefly address its future strategy by quoting CEO Eddie Wu as saying that “We will step up investment to improve users’ core experiences to drive growth in Taobao and Tmall Group and strengthen market leadership in the coming year.”

One big move the company made is increasing its share buyback program by a substantial $25 billion. That, however, didn’t seem to move investors unimpressed with the quarter’s performance.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Why Alibaba Stock Tanked Today was originally published by The Motley Fool

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