London Stock Exchange Group expected Alibaba to make 219 billion yuan in revenue. While its profits in the 4th-quarter financial results of 2024 dipped by 86%, with net income to shareholders at 3.3 billion yuan, its revenue scaled over expectations at 221.9 billion yuan.
After the fall in share trading in the first hour of around 8.1%, Alibaba shares closed down at around 6% in the US on Tuesday.
At a glance, this seems to be a consequence of the already difficult year of 2023, given the important structural changes made in Alibaba’s history. The company divided into 6 groups each, with an individual capability of raising outside funds.
While this change itself was a measure against heightening governmental regulations and a dip in economic growth, the fall in profit iis “primarily attributable to a net loss from our investments in publicly-traded companies during the quarter, compared to a net gain in the same quarter last year, due to the mark-to-market changes,” according to Alibaba.
However, in a deeper look, it is in fact, also the inability to gain in on AI growth alongside the hefty fine of $2.8 billion (18.23 billion yuan) levied upon it by the government in 2021. All these factors have made the past 12 months a difficult period for the e-commerce giant.
Even so, the revenues of the company have doubled to this day with sales in commerce platforms such as Taobao and Tmall increasing by 5%. Thus, Alibaba now vyes to upscale its cloud computing division via integrating AI, its initiatives originally discarded the previous year.
The company now seeks to minimise projects in of the lower-margins while emphasising AI-related products to “offset the impact of the roll-off of project-based revenues.” For the same, it seeks to diversify its reach towards various sectors such as “…model companies, internet companies, as well as customers from industries such as financial services and automotive.”
Hence, despite the fall in profit, the increase in revenue showcases efficient performance from all operating segments, ensuring a rather positive outlook to towards the future. As emphasised by Eddie Wu, CEO of the Alibaba Group, “This quarter’s results demonstrate that our strategies are working and we are returning to growth. Our China and international commerce businesses realised double-digit year-over-year GMV growth through our focus on the customer experience.”
The future measures would include a reduction in prices by around 59% for products powered through offshore data centres alongside continued investments to remain within price competitiveness while simultaneously reading delivery times.
