Alibaba’s top line is up 49% so far this year, and it was up 60% last year and 47% two years ago. Although, it’s stock price has not followed suit. Two years ago, today, it’s stock price was hovering around $171 per share; today, it is around $175 per share. That is just up of $2 per year! Not as close impressive as its top line neither its bottom line.
|Net Income Growth||–||186.90%||-42.23%||48.74%||35.19%|
What could be the reason?
Alibaba is listed in New York Stock Exchange. Therefore, the top two worries of its investors are:
- Western investors are much less excited about the future prospect of the Communist, one-party government of China.
- Devaluation of the Chinese currency (Yuan).
- Ongoing Trade War between the US and China.
Investors are quite worried if the government of China will change policies about foreign investment. Also, they might dictate how the company should operate. They might change or cancel the operating license on Ali Pay and other sensitive operation. It has happened in the past and the fear of happening in the future has not eloped from the investor’s mind.
Devaluation of the Chinese currency will only do one thing to western investors – it will decrease the dollar income. Most of the Alibaba’s operation is in China, therefore, the devaluation of the Chinese currency will directly reduce the income.
Also, investors are worried about the ongoing trade war between the US and China. It will also negatively affects the top and bottom line. Although, this applies to the overall market.
The highlights of the Quarterly result for the quarter ended June 30, 2019:
· Revenue was RMB114,924 million (US$16,741 million), an increase of 42% year-over-year.
· Annual active consumers on our China retail marketplaces reached 674 million, an increase of 20 million from the 12-month period ended March 31, 2019.
· Mobile MAUs on our China retail marketplaces reached 755 million in June 2019, an increase of 34 million over March 2019.
· Income from operations was RMB24,375 million (US$3,551 million), an increase of 204% year-over-year. The increase would have been 27% excluding share-based compensation expense resulting from Ant Financial’s awards to our employees. This expense was significantly higher in the quarter ended June 30, 2018 because during the quarter Ant Financial completed an equity financing at a higher valuation, which required us to recognize the increase in value of these awards. Adjusted EBITDA increased 34% year-over-year to RMB39,238 million (US$5,716 million).
· Adjusted EBITA for core commerce was RMB41,025 million (US$5,976 million), an increase of 25% year-over-year. Our marketplace-based core commerce adjusted EBITA , a non-GAAP measurement, increased 27% year-over-year to RMB46,800 million (US$6,817 million).
· Net income attributable to ordinary shareholders was RMB21,252 million (US$3,096 million), and net income was RMB19,122 million (US$2,785 million). Non-GAAP net income was RMB30,949 million (US$4,508 million), an increase of 54% year-over-year.
· Diluted earnings per ADS was RMB8.06 (US$1.17) and non-GAAP diluted earnings per ADS was RMB12.55 (US$1.83), an increase of 56% year-over-year.
· Net cash provided by operating activities was RMB34,612 million (US$5,042 million) and non-GAAP free cash flow was RMB26,361 million (US$3,840 million).