Alibaba Group reported March-quarter earnings Tuesday with mixed results for the Chinese e-commerce giant. Alibaba stock fell after earnings missed consensus expectations, despite better-than-expected revenue.
In results published before Tuesday's opening bell, Alibaba said that it earned an adjusted 10.14 Chinese yuan ($1.40) per American depository share on sales of 221.87 billion yuan ($30.6 billion) for the March-ending quarter. On average, analysts projected the e-commerce and internet services company would post adjusted earnings of 10.27 Chinese yuan ($1.42) per ADS on sales of 220.58 billion yuan ($30.5 billion), according to FactSet.
For the same period a year earlier, Alibaba posted adjusted earnings of $1.52 per ADS on sales of $29.62 billion.
Sales increased 7% year over year in local currency for the March-ending period, which is Alibaba's fiscal fourth quarter. Net income fell 86% from a year earlier to 3.27 billion yuan ($453 million), which Alibaba blamed on losses from investments in other publicly-traded companies.
Further, Alibaba announced that its board approved a two-part dividend. That includes an annual cash dividend of $1 per American depository share and a "one-time extraordinary cash dividend" of 66 cents per ADS. The total dividend will cost $4 billion, the company said.
On the stock market today, U.S.-listed Alibaba stock fell 6% to close at 79.51.
Alibaba E-Commerce Performance
Sales for Alibaba's e-commerce division, the Taobao and Tmall Group, increased 4% year over year to 93.2 billion yuan, an improvement from 2% growth a quarter earlier.
After a rough year, Alibaba has focused on offering discounts and coupons to better compete against discount e-commerce company PDD Holdings.
"Our strategy of price-competitiveness and focus on user experience is yielding results," Alibaba's news release said.
Meanwhile, sales for Alibaba's cloud-computing unit grew 3% year over year to 25.6 billion yuan. Alibaba late last year canceled plans to spin out the cloud business, citing American restrictions on exports of computing chips.
Following the report, CFRA analyst Angelo Zino reiterated a neutral hold rating for Alibaba stock. "We like the greater cash return to investors and the robust balance sheet, but expect margins to remain pressured due to more elevated investments to try to reinvigorate growth into e-commerce/cloud," Zino wrote to clients.
Alibaba Stock: Technical Ratings
With Tuesday's slide, Alibaba shares have gained 2.5% this year. The struggling stock had been helped in recent weeks by signals the broader Chinese economy is improving. Still, shares are down 5.5% over the past 12 months.
Coming into the report, Alibaba stock had a weak IBD Composite Rating of 59 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Alibaba stock's IBD Relative Strength Rating was 29 out of 99.
