Alibaba loses as investment values ​​weaken

Chinese technology and entertainment giant Alibaba reported a net loss of $2.89 billion for the three months between July and September, compared to a profit of $3.16 billion in the same period last year.

Revenues in local currency rose 3% to RMB207 billion. Reported in US dollars, revenues appeared to be down from $31.1 billion to $29.1 billion.

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Alibaba said the turnaround from profit to loss was mainly due to “an increase in net losses due to the drop in market prices of [its] equity investments in listed companies and a decrease in the share of the results of equity accounted investees.” Much of those low valuations related to the controversial financial unit Ant Financial.

Using Alibaba’s preferred non-GAAP presentation of its data, the group is said to have posted a 19% year-over-year increase in net profit to RMB33.8 billion or $4.75 billion.

CEO Daniel Zhang said the “solid results have been achieved in an environment of macro uncertainty.” In a regulatory filing, management specified that the numbers were achieved despite “the impact on consumption demand from China’s resurgence of COVID-19 and slowing cross-border trade due to rising logistics costs and currency volatility.”

The group’s digital media and entertainment cluster — which includes a web browser, movie ticketing platform, movie production and distribution, and streaming services — drove revenue growth of 4% to RMB 8.39 billion ($1.17 billion). The segment’s quarterly losses fell from RMB 931 million to RMB 117 million ($16.4 million).

Alibaba’s video streaming platform Youku saw its daily average paying subscriber base grow 8% year-over-year, “primarily driven by the continued contribution of [its] 88VIP membership program and high-quality content,” said management. “Youku continues to improve operational efficiency through disciplined investments in content and production capacity, resulting in a year-over-year loss reduction for six consecutive quarters.”

On a conference call with financial analysts following the regulatory filing, Zhang discussed the company’s long-term track record and long-term prospects.

He said group revenue is now 12 times greater than when the company went public in 2014. This is comparable to China’s GDP, which (only) doubled in the same period.

Alibaba’s ADR shares sold for $68 each in 2014 in what was then the NYSE’s largest-ever stock listing. They peaked at more than $309 apiece in October 2020, but then fell below the IPO price in late October 2022, due to uncertainty about the direction of China’s economy and the magnitude of the regulatory burden placed by the Chinese on the technology sector is imposed. government. On Wednesday, ahead of the results announcement, ADR shares closed at $78.16.

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