- China Retail constitutes 53% of the Trefis price estimate for Alibaba Group's stock.
- China Wholesale & Other constitutes 13% of the Trefis price estimate for Alibaba Group's stock.
- Cloud Computing constitutes 10% of the Trefis price estimate for Alibaba Group's stock.
WHAT HAS CHANGED?
- Latest Earnings
Alibaba's revenue for Q2 2022 (ended Sep 2021) was RMB 200.7B ($31.1B) grew 29%, mainly driven by robust growth in its China commerce retail and cloud computing businesses. Annual active consumers for the Alibaba Ecosystem reached over 1.24 billion (a quarterly net increase of 62 million consumers) which included 953 million consumers in China.
Annual active consumers on China retail marketplaces was 863 million in Sep 2021.
Income from operations was RMB 15.0B ($2.3B), an increase of 10% y-o-y.
- China's Regulatory clampdown
Recently, China's tech sector regulator ordered the country’s internet giants to fix certain anticompetitive practices and data security threats. The primary aim of this six-month rectification program is correcting industry issues like disruption of market order, infringement of users’ rights, mishandling user data and violating other regulations. The release didn't specify any company by name. The regulatory backlash first started last year with the cancellation of Ant Group’s initial public offering and has taken in other major tech companies, including Alibaba, Meituan, and most recently Didi Global Inc.
- Alibaba Recorded $99 Billion in Sales During Major Chinese Shopping Event
Known as 618 because it falls on June 18, the festival was being closely watched for signs about the health of the consumer in the world’s second-largest economy, as it looks to recover from the coronavirus pandemic. Alibaba's gross merchandise value (GMV) stood at 698.2 billion yuan ($98.52 billion). GMV is the total value of all orders for products and services placed on the company’s online platform, regardless of whether the goods are sold, delivered, or returned.
- Secondary Listing of Stock on Hong Kong Exchange
Alibaba completed a secondary listing of its stock on the Hong Kong exchange in November 2019. Part of the deal also included a lock-up for insiders and Softbank (who owns over 25% of the company) for 90 days. While the bulk of Alibaba shares will remain on NYSE, the company seemed to be looking to provide Asian investors more exposure in light of the potentially protracted U.S.- China trade war. Alibaba raised $13 billion from the offering which could be further used to drive user growth and engagement.
China Commerce (fiscal 2021 revenue of $72 billion, 66% of total revenue): Segment revenues are derived from retail e-commerce and associated marketing services in China.
Digital Media & Innovation Initiatives (fiscal 2021 revenue of $5.5 billion, 5% of total revenue): Segment revenues are derived from content subscription, software subscription, and merchant advertising offerings.
China Wholesale & Other (fiscal 2021 revenue of $15 billion, 14% of total revenue): Segment revenues are derived from wholesale commerce and logistics services, primarily driven by Chinese consumption.
International Commerce (fiscal 2021 revenue of $7.5 billion, 7% of total revenue): Segment revenues are derived from retail and wholesale operations as well as from advertising services outside China.
Cloud Computing (fiscal 2021 revenue of $9 billion, 8% of total revenue): Segment revenues are derived based on customers' duration and usage of Alibaba's service.