Coronavirus Fear Lingers as Alibaba Posts Solid Earnings

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Alibaba (NYSE:BABA) posted earnings Thursday that exceeded analysts' expectations, as the trade war proved it wasn't much of a burden on the company, but its CEO warned that the Coronavirus will likely have a significant impact on future earnings -- and the broader global economy -- if the situation on the ground doesn't begin to improve. 

Revenue for Alibaba was $23.19 billion in the quarter ended Dec. 31, up from $16.8 billion a year earlier, or a rise of 38%. Analysts were expecting revenue of $22.8 billion, or 159.7 billion RMB. The company reported that non-GAAP earnings per share came in at $2.61 while analysts expected around $2.27. Cloud computing revenues, Alibaba said, rose 62% to a record $1.5 billion.

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Mobile monthly active users, a key metric for any web company, on its retail marketplaces were reported at 824 million, up 39% from a year earlier. Annual active consumers were 711 million, up 18%. Alibaba's ADR, listed on the New York Stock Exchange, was up 3.1% higher in pre-market trading immediately following the earnings release.

The company also reported that its "Singles Day" event topped $1.43 billion in the first 90 seconds, and came to a total of $38.379 billion in gross merchandise value as the day ended, a figure that bests last year's total of $30.8 billion. However, there are a number of reasons to doubt the authenticity of the figures provided by the company.

While the quarterly earnings released Thursday did not count for the impact of the Coronavirus, the company's CEO did paint a grim picture of how it would affect earnings down the road. Calling it a 'Black Swan event', CEO Daniel Zhang said the Coronavirus presents “near term” challenges to Alibaba’s businesses that will have a “significant impact” on China and the global economy.

CFO Maggie Wu added that it’s “too early to quantify the impact” Coronavirus will have on Alibaba's broader business.

Zhang noted that Alibaba's Freshippo online supermarket is seeing a big surge in numbers thanks to both a natural migration to online ordering of groceries but also an uptick of people ordering online as they are quarantined at home.

“No matter past, present or future, we remain true to our mission and we will support our merchants to overcome this challenging time together,” Zhang said in prepared remarks.

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As Wccftech previously reported, during the last quarter funds sold more $BABA than they purchased. The data shows that, overall, funds reduced their holdings of the stock by about 20 million units during the quarter. Hedge funds, in contrast, increased their holdings by about 17.6 million units.

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