Alibaba’s strong earnings show that Chinese consumers are still spending

E-commerce giant Alibaba reported better-than-expected earnings and sales for the fourth quarter on Thursday.

shares Ali Baba (Baba) It rose nearly 15% in late morning trading after the company reported that revenue was up 9% from a year ago, topping analysts’ expectations. Alibaba said the strength was due to strong demand for online and mobile shopping, as well as a 12% jump in sales from its massive Alibaba Cloud unit.

Alibaba said it now has more than 1 billion active customers in China, the first time the company has exceeded this milestone. Alibaba has more than 1.3 billion customers around the world.

Daniel Zhang, Alibaba CEO, said in a press release that Alibaba has been able to deliver strong results “despite the overall challenges affecting supply chains and consumer sentiment.”

The company hopes the supply chain disruptions will end soon. “We are definitely seeing signs of improvement in May,” Alibaba chief financial officer Toby Xu said during a conference call with analysts on Thursday, although delivery of suspended shipments “will take some time.”

“Many merchants may need to invest in order to increase their revenue,” Xu added, especially as retailers prepare for Alibaba’s mid-year shopping festival on June 18.

Shift in Chinese consumer shopping habits

Concerns about the sharp rise in Covid in major Chinese cities remain a major concern. This has led to a shift in how (and what) Chinese consumers buy, as in the United States and other parts of the world.

“While our user movement and participation have remained flexible, consumption patterns across categories on our systems have changed,” Zhang said on the conference call.

He noted that sales in the fashion and electronics categories declined, but that “demand for essential supplies” such as food and personal care products “has increased significantly as consumers stockpiled at home.” Other categories, such as health care, sports apparel and outdoor products, have also grown rapidly, Zhang said.

Major US retailers like Walmart (WMT) And Goal (TGT) Similar trends have been reported.
But Alibaba faces other big challenges. Regulators in China have closely scrutinized domestic tech giants in the past few years. Many large Chinese companies trading in the US may be forced to delist from the New York Stock Exchange and Nasdaq.
Biggest deal maker says Chinese markets'  close to the bottom & # 39;
The Ridesharing Didi app is in the process of doing just that. Luckin Coffee, a competitor to Starbucks (SBUX)has already been written off, although the company has made an impressive comeback in China after accounting issues.
Tensions between China and the United States remain high as well. President Biden has continued to speak firmly of possible military intervention in China if it attacks Taiwan.
However, Biden and US Treasury Secretary Janet Yellen have hinted at rolling back some of the tougher Trump-era tariffs on Chinese goods.
Other major Chinese companies have reported more optimistic results recently as well. Alibaba competitor JD.com (Dinar) He said recently that fourth-quarter sales beat expectations. The Chinese search giant Baidu (Baidu) It reported better-than-expected results Thursday thanks to growth in cloud and artificial intelligence units.
Baidu’s share price rose 10% Thursday. But its stock is still down more than 10% for the year. Alibaba, JD and other top Chinese technology as online retailer Bindudu (PDD) and electric car companies New (NIO)Xpeng and Li Auto are still down sharply in 2022 despite recent bounces.

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