Alibaba share price tumbles as Q4 revenue growth disappoints

on Jan 29, 2015
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Alibaba’s (NYSE:BABA) share price plunged almost eight percent in pre-market trading today, after the Chinese e-commerce giant reported its results for the three months ended December 31. The New York-listed company said in a statement that revenues had risen 40 percent to $4.22 billion in the period, well shy of the average analyst estimate of $4.45 billion.

For the quarter, Alibaba’s earnings fell 28 percent to $964 million, or 37 cents a share. The company attributed much of the drop to the $241 million in expenses relating to share-based compensation to employees. It also booked a $134 million charge for fees from early repayment of debt and reported that it faced a rising tax expense. Excluding such items, per-share earnings rose 13 percent to 81 cents a share. The averaged analyst estimate had been earnings of 75 cents a share.

Gross merchandise value (GMV), or the sum of all Alibaba’s online commerce transactions, rose 49 percent to $127 billion. Mobile GMV accounted for 42 percent of total GMV, up from 36 percent in the previous quarter.
You Na, an analyst at ICBC International Research in Hong Kong, was quoted by Bloomberg today as saying: “The revenue increase was much lower than people expected. As more merchants start advertising on its mobile apps, revenue growth could slow as ad space and the fee it charges will be lower than what they charge for on desktops.”
According to the Financial Times, the 34 analysts projecting 12-month price targets for the New York-listed e-tailer have a median target of $120.45, with a high estimate of $148.00 and a low of $75.00. As of 27 January 2015, the consensus forecast amongst 36 polled investment analysts covering Alibaba has it that the company will outperform the market.

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