Alibaba’s strong earnings show that Chinese consumers are still spending

E-commerce giant Alibaba on Thursday reported better-than-expected earnings and sales for its most recent quarter.

Shares of Ali Baba (BABA) At the top of analysts ’forecasts, the company rose nearly 15% in late morning trading after reporting a 9% rise from a year earlier. Alibaba said that due to strong online and mobile shopping demand as well as sales from its huge Alibaba cloud unit increased by 12%.

Alibaba says it now has more than 1 billion active customers in China, the first time the company has crossed that milestone. Alibaba has over 1.3 billion subscribers worldwide.

Alibaba Charman and CEO Daniel Zhang said in a press release that Alibaba has been able to post tough results “despite macro challenges that affect the supply chain and consumer sentiment”.

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The agency hopes the disruption to the supply chain will end soon. Alibaba’s chief financial officer Toby Xu said during a conference call with analysts on Thursday that “we are definitely seeing signs of improvement in May” although it would still “take time” to deliver outstanding shipments.

Xu added that “many merchants may have to invest to increase their revenue,” especially as retailers prepare for Alibaba’s mid-year shopping festival on June 18.

Changing Chinese consumer shopping habits

Concerns about Kovid’s spike have remained a major concern in major Chinese cities. This has changed how (and what) Chinese consumers are buying, as in the United States and other parts of the world.

“While our user traffic and engagement remain resilient, our platforms have shifted the types of usage across different categories,” Zhang told a conference call.

He noted that sales in the fashion and electronics sectors declined, but that “essential supply demand” such as food and personal care products “increased significantly as more consumers stocked at home.” Zhang said other sectors such as healthcare, active clothing and outdoor products have also grown rapidly.

Top US retailers such as Walmart (WMT) And Target (TGT) Reported similar trends.
But Alibaba faces other significant challenges. China’s regulators have closely scrutinized its domestic technology giants over the past few years. And many large Chinese companies doing business in the United States may be forced to list on the New York Stock Exchange and Nasdaq.
Top dealmakers say Chinese markets
Ridesharing app sister is in the process of doing this. Lucky Coffee, its competitor Starbucks (SBUX)Already dropped from the list, although the company has made an impressive return to China following accounting problems.
Tensions are also running high between China and the United States. President Biden has spoken out strongly against possible military intervention in China if Taiwan is invaded.
However, Biden and US Treasury Secretary Janet Yellen have hinted at bringing back some more Trump-era tariffs on Chinese goods.
Other major Chinese companies have also reported more promising results lately. Alibaba’s rival (JD) Recently said that sales forecast for its latest quarter is top notch. And the Chinese search giant Baidu (The beginning) Cloud and Artificial Intelligence units reported better-than-expected results on Thursday.
Shares of Baidu rose 10% on Thursday. But its stock is still down more than 10% for the year. Online retailers such as Alibaba, JD and other top Chinese technologies Pinduduo (PDD) And electric car companies Neo (NIO)Xpeng and Li Auto are still down sharply in 2022, despite recent rebounds.

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