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Alibaba’s Comeback: Revenue Reports Surpass Forecast

If there are companies that are performing incredibly well during this pandemic, they are undeniably from the technology sector, particularly in e-commerce.

China’s biggest technology company, Alibaba, made it past earnings and revenue forecasts.

The fiscal first-quarter profit doubled from last year. Therefore, the net income totaled to ¥47.59 billion or ¥17.36 per share from ¥8.06 in the same period the previous year.

The positive news pushed stocks up by 0.5% in premarket stock trading, recording a 23% increase over the year.

Alibaba’s total sales for the quarter stands at ¥153.8 billion or $22.2 billion.

Sales in its core commerce business made a comeback, reaching pre-pandemic performance. It jumped to ¥133.32 billion, translating to a 34% climb for the quarter ending on June.

Similarly, its cloud computing venture skyrocketed to ¥12.35 billion or a 59% increase brought by the shift to online shopping and work from home schemes.

Alibaba shares in the revamping stock market index S&P 500 gained 20%. The firm’s US-listed shares are up in the stock market, closing at 260.59 USD before the earnings call.

The firm maintains its grace under pressure, as Trump’s administration threatened to go ahead with its Chinese-tech purge. This is after it already started this process with TikTok and WeChat.

 

The Sustainability of E-commerce

The company took advantage of the expansion of digital transformation. This accelerated Alibaba’s consumption and enterprise operations, its chief executive acknowledged.

The volume of online physical goods in its business-to-consumer (b2c) platform, Tmall, rose by 27% in the quarter. This is driven by the sustained growth of new customers and a higher-order frequency among existing users.

Adding to this is China’s quick recovery from the pandemic. The country is the world’s first major economy to record a 3% growth in Q2.

China’s biggest e-commerce platform currently boasts 742 million active users, up by 16 million from March’s figures.

Although traditional stores began to experience bouncing foot traffic following the easing of restrictions, online shopping has already taken the top post.

Online shopping offers convenience and a wide array of choices for consumers. This is not even mentioning its time and risk-saving offerings.

Despite the excellent profits, Alibaba is unending in trying to make its growth sustainable. As a result, the company is now gearing for the post-COVID environment, keeping a close watch on every shift and tweak in customer needs.

Growing competition against top competitors raises concerns for the technology giant’s ability to maintain leadership.

Recently, its top competitors, JD.com and Pinduoduo, have been making more efforts in their platforms as they are aiming to capture a more significant piece in the Chinese consumer market.

The good news in revenue validates analysts’ prior claim that the e-commerce frontrunner will bounce back better, as merchants and consumers prefer to take refuge in digital channels now more than ever.



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