Earnings the period ending March 31, 2019
Alibaba Group Holding Ltd (NYSE:BABA) recently announced its earnings for the fiscal year ended March 31, 2019. The results highlighted a company outperforming against all the odds. Revenue grew 51% YOY to $13.9 billion with the number of active consumers increasing by 18M during the period to 654M. The e-commerce giant posted diluted earnings per share of $1.28 that represented a 50% YOY surge.
The stellar earnings rallied the company’s stock to nearly $180 although the prices have since retreated to $160.76, giving the company a valuation of $423.64 billion. The ongoing trade war between China and the United States, coupled with the general Chinese economic downturn meant that Alibaba-China’s tech giant would be at scrutiny.
Alibaba Vs. Trade War
Based on the outstanding earnings, seemingly Alibaba is not feeling the trade war and economic pinch. This is not to say, however, that Alibaba is immune to the negative economic forces sabotaging the growth of businesses operating from mainland China. According to the New York Times, although the recent earnings dwarfed analysts’ expectations, the company generally experienced the “2nd-slowest pace of revenue expansion since 2016.”
Alibaba’s larger than life magnitude could be cushioning the company during these trying times. The company also added several businesses under its already rich portfolio, which further contributed to the increased revenue during the just concluded fiscal period. With revenue from the new acquisitions excluded, YOY sales would have increased by merely 2/5, making it the slowest growth in 3 years.
Analysts are divided on Alibaba’s future stock outlook with some quarters arguing that the trade war could further dampen the company’s stock. Optimists, on the other hand, believe that the stock will defy market odds and rally to $215. Optimists believe that the company will generate $54.5 billion in sales in the 2020 fiscal period and posting earnings per share of $6.56. Time will tell if the shares will tumble or gain grounds in the long run.
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