China-based internet giant Alibaba reported better-than-expected fiscal third-quarter revenue early Wednesday as the company also announced a $25 billion increase to its share-buyback program. BABA shares sank Wednesday.
Alibaba announced Q3 revenue of $36.67 million, or 260.35 million Chinese yuan. Meanwhile, Alibaba adjusted earnings per American depository share (ADS) came in at $2.67. Analysts had predicted EPS of $2.66 and revenue totaling $36.16 billion for the internet behemoth, according to FactSet.
Total revenue from the company's Taobao and Tmall online marketplace climbed 3% year-over-year in local currency, totaling $18.18 billion. Meanwhile its cloud intelligence group revenue increased 3% to $3.95 billion in Q3.
The company also announced Wednesday that its board of directors has approved a $25 billion increase to its share repurchase program. Alibaba Chief Financial Officer Toby Xu said in the earnings release the increase demonstrates the company's "confidence in the outlook of our business and cash flow."
This comes after Alibaba on Jan. 2 announced it repurchased 3.3% of its outstanding shares in calendar year 2023 for a total of $9.5 billion. In the fiscal third quarter, Alibaba purchased of 292.7 million ordinary shares, equivalent of 36.6 million ADS, for a total of $2.9 billion.
"Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing. We will step up investment to improve users' core experiences to drive growth in Taobao and Tmall Group and strengthen market leadership in the coming year," Chief Executive Eddie Wu added in the earnings release.
Alibaba Stock Performance
BABA shares fell 5.8% to 73.67 Wednesday during market action. On Tuesday, BABA shares advanced 4.8% to 78.23. Alibaba surged on Jan. 23 on reports that co-founder Jack Ma and business associate Joe Tsai have been buying shares of BABA stock in recent months.
Alibaba shares broke above their 50-day moving average this week and, on Tuesday, cleared a declining trend line. Risk-tolerant investors could use that line to plot an early, aggressive buy point.
The stock remains more than 75% below its record high from October 2020.
In November 2023, Alibaba reported better-than-expected fiscal Q2 earnings, but sellers hit the stock after the company announced it was calling off plans to spin off its cloud unit in light of recently-expanded U.S. chip restrictions.
In Q2, Alibaba reported adjusted earnings of $2.16 per share on sales of $31 billion. BABA stock analysts expected Alibaba to post adjusted earnings of $2.10 per share on sales of $31 billion, according to FactSet.
Is Alibaba Stock A Buy Or A Sell?
Alibaba also announced in November that its board approved a $2.5 billion cash dividend. The dividend is worth $1 per ADS and will be payable in U.S. dollars to shareholders as of the close of trading on Dec. 21.
Alibaba stock has a 66 Composite Rating out of 99. BABA stock also has a 19 Relative Strength Rating and a 91 EPS Rating.
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