Alibaba Stock (NYSE: BABA) Declines After Revenue Miss

Alibaba Group Holding (NYSE: BABA) experienced a notable decline in its stock prices following a revenue performance that fell short of market expectations for the fiscal fourth quarter. Alibaba’s stock in Hong Kong (HKG: 9988) dipped by 4.27%, trading at HKD123.40, while its New York-listed (NYSE) shares saw a drop of 7.57%, closing at USD123.90.

Alibaba reported a revenue increase of 7% to CNY236.5 billion for the quarter ending March 31. However, this figure did not meet the market's anticipated CNY241 billion. Despite this shortfall, Alibaba demonstrated strong profitability, with a 22% rise in the non-GAAP net profit, totaling CNY29.9 billion. The net profit attributable to ordinary shareholders was recorded at CNY12.4 billion.

For the full fiscal year, Alibaba's revenue reached CNY996.3 billion, with a non-GAAP net profit amounting to CNY158.1 billion. CEO Eddie Wu underscored the company's strategic focus on its core businesses and artificial intelligence (AI) as pivotal growth engines. In alignment with this focus, Alibaba plans to invest over USD50 billion in technology infrastructure geared towards AI advancements over the coming three years.

The company's cloud segment showed robust growth, with the Cloud Intelligence Group's revenue rising 18% to CNY30.1 billion during the fiscal fourth quarter. Lydia Liu, Vice President and Head of Investor Relations, emphasized Alibaba's leading position as a cloud provider and the company's continuous technological advancements.

Various other segments of Alibaba's business displayed varied growth rates. The customer manager revenue of Taobao and Tmall Group increased by 12% to CNY71.1 billion. The Alibaba International Digital Commerce Group saw a 22% revenue rise to CNY33.6 billion. Additionally, Cainiao Smart Logistics Network experienced a 12% increase in revenue to CNY21.6 billion. Similarly, the Local Services Group's revenue grew by 10% to CNY16.1 billion, while the Digital Media and Entertainment Group recorded a 12% rise in revenue, reaching CNY5.6 billion.

This morning's pre-market seems to be starting off more positively, with a 1.75% indicative gain for BABA moving the stock back above $126. For the bulls, having seen Alibaba gain 45.85% YTD, they will be hoping that yesterday's decline is a mere blip on an upward curve, although with earnings fresh in the mind, it may take something more fundamental to shift sentiment.