Categories: Market Overview

Trade war and economic slowdown: Alibaba sales have been growing at the lowest rate in 3 years

E-commerce giant Alibaba Group’s quarterly revenue grew at its weakest pace since 2016, as the impact of a slowing Chinese economy and a crippling Sino-U.S. trade war kept buyers away during its top-sale season. The result is likely to add to investor worries as it highlights the mounting pressures facing the e-commerce behemoth, whose sales are often seen as a yardstick of consumer spending in the world’s second-largest economy.

Alibaba, the second most valuable public company in Asia after Tencent, posted on Thursday third-quarter revenue of 117.28 billion yuan ($17.47 billion), compared with 83 billion yuan a year earlier. That compares with an estimate for revenue of 118.9 billion yuan from 31 analysts polled by Refinitiv. Net income rose 33 percent to 30.96 billion yuan, however, beating estimates and sending Alibaba’s stock up by about 1.6 percent in pre-market trade.

Alibaba typically posts its highest revenue in the December quarter due to its mega “Singles’ Day” in November — the world’s biggest online sales event that outstrips the sales of U.S. shopping holidays Black Friday and Cyber Monday combined. In 2018, even though Alibaba netted a record $30 billion from the Singles’ Day, annual growth dropped to the weakest rate in the event’s 10-year history as a slowing Chinese economy and trade tensions chilled sentiment. Given signs of saturation in China’s urban market, Alibaba has been trying to grow outside of its core e-commerce business to win new customers. The company continued to invest heavily in cloud computing, artificial intelligence and online entertainment in the December quarter. Revenue from its cloud business rose 84 percent to 6.6 billion yuan, while sales from its digital entertainment and media business rose 20 percent to 6.5 billion yuan.

Alibaba sales grew at the weakest pace in three years as slowing China bites, CNBC, Jan 31

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