Alibaba Group Holding Ltd.,
China’s largest e-commerce, surged its market value by $42 billion after the
company forecasted on Thursday at the investor conference that it is expecting
a huge revenue growth for its current fiscal year to grow at a much higher rate
than analysts had estimated. It mentioned expectations for growing sales
volumes on its online marketplaces and, even more strongly, rolling demand by
merchants for its digital ad space.
Alibaba Chief Financial
officer, Maggie Wu, said that fiscal 2018 revenue is expected to rise 45% to
49% above past-year levels, eliciting cheers from the crowd of investors
attending the company’s BABA Investor Day at its headquarters in Hangzhou,
China. This target implies sales up to $34.3 billion. Analysts had actually
been expecting revenues this year to come in $32.42 billion.
The guidance puts Alibaba,
which in May recorded its biggest quarterly rise in revenues since its
blockbuster initial public offering in 2014, on track for its biggest
underlying rise so far, said Maggie Wu, addressing analysts.
Alibaba, which often
described as an e-commerce firm, has expanded well beyond just online retail.
Just as US-based analogue Amazon now offers a wide list of services, Alibaba is
now involved in logistics management, digital payments, entertainment content
and cloud data centers.
Alibaba’s chairman, Jack Ma,
is now Asia’s richest person and 14th wealthiest in the world. His
net worth has jumped $8.5 billion this year to $41.8 billion.
The company U.S. shares rose 13%
to $142.34 on Thursday, continuing a run that has taken them to their highest
level since the Chinese company raised $25 billion three years ago.
In its latest worldwide ad
spending forecast, e-Marketer anticipated that Alibaba will account for 31.9%
of digital ad revenues in China this year, more than any other company. By
2019, that share will grow to 34.3%, easily outperforming main rivals Baidu and
Tencent. E-marketers projects that digital ad spending in China will total
$50.3 billion this year, accounting for 59.6% of the country’s total media
expenditures.
Last year, revenues increased
by 56%, but that included Lazada, the South East Asian e-commerce group which
was consolidated into Alibaba’s numbers from April. Removing that out, revenue
would have carved last year’s growth of 56% back to 44-45%, said Ms. Wu.
Alibaba will start reporting
“active consumers” as opposed to just buyers, to reflect an increasingly
diverse customer base. It will begin to unveil “customer management revenue”
instead of just online marketing, to reflect a broader base of advertising
platforms.
Meanwhile, Alibaba is holding
meetings with investors this week. Ma is scheduled to come on Frida to discuss
the company’s initiatives.
By 4:10 AM GMT-4, Alibaba
Group Holding Ltd traded 13.26%, or 16.67, to $142.34. It opened in $142.51,
with a session high of $143.70, and a session low of 135.21. Its market
capitalization was 355.02 billion, with P/E ratio of 56.95.
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Alibaba Expects Huge Revenue Growth in FY2018
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