Alibaba Group Holding Limited (NYSE: BABA) stock fell nearly 6% on Wednesday after the Chinese e-commerce giant reported lower-than-expected earnings for the third quarter.
Alibaba disclosed third-quarter earnings per share (EPS) of 18.97 Chinese yuan ($2.67), with a 5% year-on-year revenue increase to 260.35 billion yuan ($36.6 billion). Both figures fell short of expectations.
The total net income of Alibaba plummeted by 77% due to mark-to-market adjustments on its equity investments and a decline in operational income. These factors were primarily associated with impairment charges incurred by its video streaming service, Youku, and the supermarket chain, Sun Art.
Chinese e-commerce giant saw slowed sales on Taobao, Tmall, and its cloud computing division, with growth rates of just 2% and 3%, respectively.
CEO Eddie Wu noted that moving forward, Alibaba’s primary focus would be “to reignite the growth of our core businesses, e-commerce, and cloud computing.”
CFO Toby Xu revealed that the company plans to boost its share repurchase program by an additional $25 billion, citing a firm belief in the business’s prospects and cash flow. This adjustment brings the total buyback amount to $35.3 billion by the conclusion of 2027.
Alibaba (NYSE: BABA) Stock Reaction
BABA stock plunged 5.87% to close at $73.64 on Wednesday. The traders had exchanged hands with 53,431,622 (53.43 million) shares compared to the average daily trading volume of 22.33 million.
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