E-commerce giant Alibaba Group Holding Ltd reported quarterly profit far above market expectations and played down worries of Chinese economic slowdown and U.S. tariff effects, sending its shares up 6 percent, Trend reports referring to Reuters.
While quarterly revenue grew at its weakest pace since 2016 and modestly missed estimates, gross merchandise volume (GMV) - a key metric - grew at a solid 29 percent and the company’s budding cloud business continued to show promise.
Tech investors have fretted over the impact of a slowing Chinese economy and a crippling Sino-U.S. trade war, which have been blamed for weak results at a slew companies including Apple Inc and chipmakers.
However, Alibaba’s earnings results - often seen as a yardstick of consumer spending in the world’s second-largest economy - are likely to ease some worries.
“Concerns about trade tensions might affect sentiment, but Alibaba’s exposure to the tangible effects of trade tariffs is small,” Alibaba’s executive vice-chairman, Joe Tsai, said on a post-earnings call on Wednesday.
“For our businesses in e-commerce, consumer services, entertainment and cloud computing, the primary growth driver is not exports but domestic consumption and corporate transformation.”
Alibaba’s founder Jack Ma has previously described the China-U.S. trade spat as the “most stupid thing in the world”.
Alibaba, the second-most valuable public company in Asia after Tencent Holdings Ltd, posted third-quarter net profit of 33.05 billion yuan ($4.92 billion), up 37 percent from a year earlier. This compared with analysts’ view of 21.28 billion yuan, according to I/B/E/S estimates from Refinitiv.
Profitability got a one-time boost from a non-cash gain of 22 billion yuan from the revaluation of Alibaba’s previously held equity interest in food and lifestyle services firm Koubei, partly offset by impairment charges of 7.06 billion yuan.
Revenue jumped 41 percent to 117.28 billion yuan, compared with an estimate of 118.9 billion yuan.
Alibaba’s shares, traded on the New York Stock Exchange, closed up more than 6 percent on Wednesday. They have slumped 16 percent in the past 12 months but have rallied so far this month.