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Alibaba's Growth Proves It Is the True Amazon of China
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Alibaba (BABA - Free Report) stock climbed 4% premarket Thursday after the firm reported quarterly financial results that encouraged investors and helped highlight some of its similarities to its U.S. counterpart Amazon (AMZN - Free Report) . The Chinese e-commerce powerhouse saw its revenues skyrocket, while its net income slipped as it invested heavily in its own expansive and diverse future.
June Quarter Overview
Alibaba’s revenues skyrocketed 61% to reach $12.23 billion. Meanwhile, the company’s adjusted quarterly earnings climbed to $1.22 per share, which fell short of our Zacks Consensus Estimate that called for $1.29 per share. And Alibaba’s net income attributable to shareholders plummeted 41% to $1.31 billion. The firm noted that this decline was drive by a one-off stock compensation from the revaluation of its affiliate Ant Financial Services Group.
The e-commerce titian said in June that Ant had raised around $14 billion from investors around the world in what was one of the biggest fundraisings of private capital on record. Ant, which spun off from Alibaba before it went public in 2014, is one of the largest online payment platforms in China.
Alibaba also noted that it will merge its recently acquired food-delivery firm Ele.me with Koubei, which is similar to Yelp (YELP - Free Report) . The new unit is set to receive a $3 billion investment led by Alibaba and SoftBank.
Amazon-Esque Moves
The company has long been compared to Amazon, and for good reason. Alibaba saw its core e-commerce revenues soar 61% to reach $10.47 billion, which accounted for roughly 85% of BABA’s overall quarterly revenues. Last quarter, Amazon’s net product sales of $31.86 billion made up roughly 60% of the company’s total Q2 revenues. Clearly, BABA is still much more dependent on e-commerce than Amazon, but that is why it is actively trying to expand beyond its core digital commerce platforms: Taobao, Tmall, and Alibaba.com.
Similar to Jeff Bezos’ firm, Alibaba is pushing into physical retail and food-delivery services, which includes its recently announced partnership with Starbucks (SBUX - Free Report) . The Chinese conglomerate also hopes to expand its reach into everything from international markets and logistics, in moves reminiscent of its U.S. peer.
Investors will also be pleased to note that its growing cloud computing business saw its revenues skyrocket 93% to hit $710 million. BABA’s big quarterly gain should help it climb up the list of the world’s largest cloud computing firms. Amazon reportedly grabbed 34% of cloud market share last quarter, which outpaced Microsoft’s (MSFT - Free Report) 14%, IBM’s (IBM - Free Report) 8%, Google’s (GOOGL - Free Report) 6%, and Alibaba’s (BABA - Free Report) 4%, according to Synergy Research Group.
Just when you thought the company couldn’t operate a business more akin to Amazon, its digital media and entertainment revenues soared 46% to $903 million. This growing unit includes its video-streaming platform Youku as well as its music-streaming service Xiami. Alibaba signed a multi-year content licensing agreement with Disney (DIS - Free Report) subsidiary Buena Vista International back in February that saw it land the rights to stream a ton of Disney content.
The company has also jumped into sports streaming just like Amazon has in its fight for streaming superiority over Netflix (NFLX - Free Report) , Hulu, and soon enough Apple (AAPL - Free Report) and Disney. Alibaba, through a partnership with China Central Television, streamed all of the 2018 FIFA World Cup. The World Cup, along with its continued original content investment, led to daily average subscriber growth of 200% for Youku.
Meanwhile, Alibaba’s revenues from its “innovation initiatives” division surged 64% to touch $160 million. Amazon also has an “other” unit that includes newer ventures such as its growing advertising services branch.
Bottom Line
Amazon is a much richer and more successful company than Alibaba at this point. But BABA didn’t go public on the NYSE until 2014, while AMZN listed its IPO in 1997. Still, it is pretty easy to see the similarities, as Alibaba actively expands into new areas beyond e-commerce.
Alibaba’s annual active consumers on its retail marketplaces reached 576 million, which marked a 24 million climb from the 12-month period ended in its March quarter. The firm noted that roughly 80% of these gains came from “lower tier cities” as Alibaba tries to expand its base outside of Shanghai, Beijing, Guangzhou, and Shenzhen, where its services are more saturated.
Luckily, for Alibaba and investors, there are roughly 170 cities in China that are home to more than one million residents. Plus, the firm’s mobile MAUs reached 634 million, up 17 million from BABA’s March quarter. Meanwhile, Amazon Prime boasts over 100 million subscribers and hopes to one day penetrate the key market Alibaba controls.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Alibaba's Growth Proves It Is the True Amazon of China
Alibaba (BABA - Free Report) stock climbed 4% premarket Thursday after the firm reported quarterly financial results that encouraged investors and helped highlight some of its similarities to its U.S. counterpart Amazon (AMZN - Free Report) . The Chinese e-commerce powerhouse saw its revenues skyrocket, while its net income slipped as it invested heavily in its own expansive and diverse future.
June Quarter Overview
Alibaba’s revenues skyrocketed 61% to reach $12.23 billion. Meanwhile, the company’s adjusted quarterly earnings climbed to $1.22 per share, which fell short of our Zacks Consensus Estimate that called for $1.29 per share. And Alibaba’s net income attributable to shareholders plummeted 41% to $1.31 billion. The firm noted that this decline was drive by a one-off stock compensation from the revaluation of its affiliate Ant Financial Services Group.
The e-commerce titian said in June that Ant had raised around $14 billion from investors around the world in what was one of the biggest fundraisings of private capital on record. Ant, which spun off from Alibaba before it went public in 2014, is one of the largest online payment platforms in China.
Alibaba also noted that it will merge its recently acquired food-delivery firm Ele.me with Koubei, which is similar to Yelp (YELP - Free Report) . The new unit is set to receive a $3 billion investment led by Alibaba and SoftBank.
Amazon-Esque Moves
The company has long been compared to Amazon, and for good reason. Alibaba saw its core e-commerce revenues soar 61% to reach $10.47 billion, which accounted for roughly 85% of BABA’s overall quarterly revenues. Last quarter, Amazon’s net product sales of $31.86 billion made up roughly 60% of the company’s total Q2 revenues. Clearly, BABA is still much more dependent on e-commerce than Amazon, but that is why it is actively trying to expand beyond its core digital commerce platforms: Taobao, Tmall, and Alibaba.com.
Similar to Jeff Bezos’ firm, Alibaba is pushing into physical retail and food-delivery services, which includes its recently announced partnership with Starbucks (SBUX - Free Report) . The Chinese conglomerate also hopes to expand its reach into everything from international markets and logistics, in moves reminiscent of its U.S. peer.
Investors will also be pleased to note that its growing cloud computing business saw its revenues skyrocket 93% to hit $710 million. BABA’s big quarterly gain should help it climb up the list of the world’s largest cloud computing firms. Amazon reportedly grabbed 34% of cloud market share last quarter, which outpaced Microsoft’s (MSFT - Free Report) 14%, IBM’s (IBM - Free Report) 8%, Google’s (GOOGL - Free Report) 6%, and Alibaba’s (BABA - Free Report) 4%, according to Synergy Research Group.
Just when you thought the company couldn’t operate a business more akin to Amazon, its digital media and entertainment revenues soared 46% to $903 million. This growing unit includes its video-streaming platform Youku as well as its music-streaming service Xiami. Alibaba signed a multi-year content licensing agreement with Disney (DIS - Free Report) subsidiary Buena Vista International back in February that saw it land the rights to stream a ton of Disney content.
The company has also jumped into sports streaming just like Amazon has in its fight for streaming superiority over Netflix (NFLX - Free Report) , Hulu, and soon enough Apple (AAPL - Free Report) and Disney. Alibaba, through a partnership with China Central Television, streamed all of the 2018 FIFA World Cup. The World Cup, along with its continued original content investment, led to daily average subscriber growth of 200% for Youku.
Meanwhile, Alibaba’s revenues from its “innovation initiatives” division surged 64% to touch $160 million. Amazon also has an “other” unit that includes newer ventures such as its growing advertising services branch.
Bottom Line
Amazon is a much richer and more successful company than Alibaba at this point. But BABA didn’t go public on the NYSE until 2014, while AMZN listed its IPO in 1997. Still, it is pretty easy to see the similarities, as Alibaba actively expands into new areas beyond e-commerce.
Alibaba’s annual active consumers on its retail marketplaces reached 576 million, which marked a 24 million climb from the 12-month period ended in its March quarter. The firm noted that roughly 80% of these gains came from “lower tier cities” as Alibaba tries to expand its base outside of Shanghai, Beijing, Guangzhou, and Shenzhen, where its services are more saturated.
Luckily, for Alibaba and investors, there are roughly 170 cities in China that are home to more than one million residents. Plus, the firm’s mobile MAUs reached 634 million, up 17 million from BABA’s March quarter. Meanwhile, Amazon Prime boasts over 100 million subscribers and hopes to one day penetrate the key market Alibaba controls.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>