Alibaba stock sinks on Q4 profit loss of 86% YoY

Shares of Alibaba (BABA) are trading lower on Tuesday morning after the company posted an 86% loss in profit year-over-year. However, the company noted areas of acceleration, including customer growth and cloud computing revenue.

Yahoo Finance Anchors Brad Smith and Seana Smith break down the latest developments for Alibaba and what they could mean for the company moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Nicholas Jacobino

Video transcript

Shares of Alibaba sinking this morning after it saw profit plunge 86% from a year ago.

But the Chinese e commerce giant did see a revenue come in and beat expectations for the third uh for the fourth quarter here.

Taking a look at the shares.

They're down by about 5.2%.

Shana.

I don't print off too many earnings reports, but I printed off this one here today for Alibaba.

One of the huge things of course was the profit drop.

It was just so striking that I thought it was worth the printed paper and the ink.

But at the end of the day, one of the things that they also mentioned was air of acceleration, acceleration of growth in customers and cloud computing revenue specifically, that's the more profit friendly part of their business.

However, you still got to look across one of the major items within China as this moderating consumer continues to impact the ecommerce and marketplace revenue there.

You could have just printed the 86% number, save some paper I could have done that, you know, killing a lot of tree with that, it's worth it.

You made your point.

So it was it was worth the prop to make the point.

But I say back to the large story because this is also Ali when you take a look at Alibaba, you take a look at these results like you're talking about here that 86% drop in profit.

It is so our net income it is, it's worth taking a look at it as we're zeroing in on because Alibaba is a barometer for so many of these other larger Chinese companies here and also just gives us a sense of the recovery or lack thereof that is playing out the pressure that Chinese consumers remain under as the economy does it continue to struggle?

And then Alibaba specifically, there has been some concerns as been voiced by a number of analysts, even some inside the company about losing some of their market share here to some of their rivals out there, namely Pinduoduo PDD when it comes to some of that lost business.

So there are certainly a number of concerns that continue to surround Alibaba.

But when you take a look at the extended action here on shares off just about 5% I think you could talk that up to some of those persistent worries that the company has had around the weakening consumer here in China, the 86% drop that you noted their net income.

And then also just how long it's going to take for this recovery to play out and to really start to pick up more.

Yeah.

And I think that's where they're going to lean into one of the more profitable elements of their business here, especially as we had all expected for Alibaba to be in kind of the six different group break up.

Uh and six different segment break up by this point in time, you, you kind of move past all of that and now focus is really on all right, where they're going to be able to drum up even more demand for some of their portfolio clients within that cloud intelligence group which actually saw for the quarter ended uh March 31st, that ultimately grew by about 3% year over year.

And so really investing further in that um further in compute database and A I products there, larger question of what those A I products will look like.

You, you don't really annex Alibaba to the same A I conversation that you would a Microsoft an alphabet or Google uh or even uh well, I'm not gonna put Apple in there but a meta platforms at this juncture.

Yeah.

Yeah.

Yeah.

And, and I think that that's the big question too just in terms of what that growth looks like and what their plans in terms of future capital allocation, what that exactly looks like their investments here for A I.