Alibaba, whose headquarters appeared here on May 26, said its online physical goods GMV in China, excluding unpaid orders, declined further in April, with “low teens” down from last year.
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Since the fall of 2020, China has fined and examined companies Alleged monopolistic practices. The re-emergence of the Covid virus since March has put additional pressure on growth, as travel restrictions and stay-at-home orders disrupt supply chains and logistics.
Reflecting the economic slowdown, e-commerce giant Alibaba on Thursday reported a drop in online shopping for its two major platforms in China in the quarter ending March 31.
The company’s total revenue rose 9% in the fourth quarter of last year — the slowest on record, according to financial history accessed by Wind Information.
Tencent’s revenue for the quarter changed little, while JD.com saw a roughly 18% increase from a year ago — both the slowest on record, according to Wind data.
Alibaba shares rose about 15% in New York trading overnight after reporting better-than-expected results. US-listed JD.com shares are up 5%, while Tencent shares are up more than 1% in Hong Kong trading on Friday.
“Total sensitive stocks” such as Alibaba and Baidu Jialong Shi and Thomas Shen, analysts at Nomura, said in a note on Friday that they may temporarily benefit from lower earnings expectations, predicting Shanghai is close to ending its shutdown.
“However, we believe that the sustainability of this rise will likely be dictated by the pace of the recovery of consumer demand in China, Which the market is likely to follow closely over the coming months.”
Already slowing retail sales in China It fell the most in April, down 11.1% from a year ago.
Even online sales of physical goods are down 1% — worse than they were during the initial shock of the pandemic in 2020. That’s according to CNBC calculations of official data accessed through Wind Information.
Nomura analysts said many companies decided to cut marketing spending as a way to weather the challenging environment, “which could lead to a delayed recovery in the advertising industry even if China is completely out of lockdown.”
Excluding outstanding orders, Alibaba said, the gross merchandise value (GMV) saw a “low-single-digit decline” from last year, according to the earnings call transcript from FactSet. GMV is a measure of the goods sold during a specified period of time.
The company said its GMV online physical goods in China, excluding unpaid orders, declined further in April, with “low teens” down from a year ago. The company said that more than 80 cities in China – most of which are national economic centers – reported confirmed cases of the Covid virus in April. This accounts for more than half of Alibaba GMV’s Chinese retail market.
For the April-June quarter, China Renaissance analysts said in a report that they expect Alibaba’s business GMV to decline 13.5% year over year, representing a 6% decline in overall net revenue.
Other Chinese companies that reported fourth-quarter results presented a more optimistic picture.
Baidu: Wind data showed that a moderate 1% quarterly revenue increase for Chinese technology company Baidu was the worst since 2020, a year that saw two quarters of revenue decline. The search engine giant has expanded in recent years to include cloud services and robot.
“We see solid progress in its various AI initiatives,” Daiwa Capital Markets analysts wrote in a report Thursday. They noted that Baidu’s AI cloud revenue grew 45% year-over-year in the first quarter, faster than the company’s peers.
dada: Grocery delivery company dadaJD, which is now majority-owned, reported a 21% year-over-year revenue increase in the most recent quarter, the best since the third quarter of 2021, according to Wind. Dada said it is one of the companies approved by the local government to continue operations during the lockdowns.
The company reported more than tripling in GMV and doubling the number of active customers in the 12 months ending in late March, versus the same period two years ago.
Queshu: Emerging E-Commerce App, Short Video & Live Streaming Queshu Wind reported 19% revenue growth last quarter, the slowest on record, despite only going back to the third quarter of 2020, Wind showed.
“Despite recent macro uncertainties due to COVID, we believe Kuaishou’s upward efforts in market share gains in advertising, e-commerce and cost-effective control can continue to help Kuaishou excel on fundamentals,” UBS analyst Felix Liu and his team wrote this week.
Analysts said it was “impressive” that Kuaishou achieved growth in the number of active users and time spent per user, while using lower-than-expected sales and marketing expenditures.
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