Alibaba's Q3 Earnings Fall, Approves $25B Buyback

Alibaba Group Holding reported a decrease in fiscal Q3 non-GAAP earnings, with 18.97 Chinese renminbi ($2.67) per diluted American depositary share, down from 19.26 renminbi a year earlier. The company's revenue for the quarter ending Dec. 31 was 260.35 billion renminbi, an increase from 247.76 billion renminbi a year earlier. However, this fell short of the average analyst estimate of 261.72 billion renminbi.

The company's net income attributable to ordinary shareholders was 14.4 billion yuan ($2 billion), and net income was 10.7 billion yuan. This represents a 77% decrease, primarily due to valuation changes from equity investments and impairments related to hypermarket operator Sun Art and online video streaming service Youku. This resulted in a significant drop in profit for the October-December quarter.

Alibaba's board approved a $25 billion increase to its share repurchase program, bringing the total repurchase authorization to $35.3 billion over the next three fiscal years. This increase is set to last through the end of March 2027. The board approved this increase with the aim of reigniting the growth of their core businesses, e-commerce, and cloud computing.

Despite these measures, Alibaba's HK shares fell 6.1% after missing analysts' estimates for third-quarter revenue. This was attributed to a weak retail environment and a faltering economic recovery in China. The company's U.S.-listed shares also fell nearly 6%. The plan to buy back $25 billion of its stock failed to generate investor enthusiasm.

Lastly, revenue growth for Alibaba's Taobao and Tmall Group was only 2% for the quarter. This includes year-end sales events such as Singles Day, which have traditionally provided a boost for the online shopping sites.