Alibaba Earnings Preview: Distractions Hang Over Jack Ma’s Core Company

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Regardless of what happens as Alibaba‘s earnings are announced Thursday, one story will hang over the proceedings. Alibaba Co-founder Jack Ma is also the founder of Ant Group. Anyone not living in a cave will know that Ant had its IPO suspended by the Chinese government earlier this week, taking $3 billion out of Ma’s coffers and dropping Alibaba’s share price. Don’t worry about Ma, he’ll eat. And don’t worry about Alibaba. Thursday’s (Nov. 5) earnings should make most people forget about Ant for a bit.

Like most digital-first companies, Alibaba has profited during the pandemic, but that’s nothing new. Its scale is as massive as China. For Q2 it showed revenue growing 34 percent year-over-year with its domestic core commerce business fully recovered to pre-COVID-19 levels. Its cloud computing revenue grew 59 percent over 2019. For Q2, its China-based retail marketplaces had 874 million users representing a quarterly net increase of 28 million. Analysts expect the company to at least equal and possibly exceed those results, and they will be watching that active user number, which could theoretically hit the billion mark.

“Investors will focus on Alibaba’s annual active consumers in China,” said Investopedia. “This key metric tracks the total number of user accounts that placed at least one confirmed order through Alibaba’s China retail marketplaces in the last 12 months. The metric ignores whether or not the transaction was actually settled. Retaining and attracting active consumers is important to Alibaba’s business model, which in large part consists of selling marketing services to the merchants that sell their wares on the company’s online platforms. The more active consumers Alibaba attracts, the more the company is able to generate advertising revenue from those merchants. But more active consumers also means more people exposed to Alibaba’s cloud and entertainment businesses, key areas of future growth.”

The earnings announcement comes as Alibaba and its various retail brands prepare for Singles Day, which is Nov. 11. Think of it as Prime Day for a billion people. This year, the company is adding new features to meet what it says are rapidly changing consumer trends. These include broader consumer reach and bigger promotions; “double” the number of shopping windows that will spotlight more brands and a more high-profile spot for livestreaming technology which has proven to be wildly popular with Chinese consumers.

The “double” number of shopping windows is a play on “single.” The festival actually started Sunday (Nov. 1) through Tuesday (Nov. 3) ahead of the main event on Nov. 11, with the aim of providing merchants, specifically new brands and small businesses, the opportunity to showcase their products and tell their brand stories amid the pandemic.

Livestreaming will be a central feature of both windows. In addition to sessions hosted by top livestreamers, about 400 company executives and 300 celebrities will also hold individual livestreaming sessions. Taobao Live, an Alibaba company, and will offer sessions ranging from cosmetics and electronics to cars and houses. New features will include online property viewings and virtual vehicle test drives.

Another Alibaba marketplace, Tmall Luxury, will also be part of the Singles Day event. It recently announced new features to bolster luxury brands’ connections with China’s Generation Z consumers. In September, Tmall Luxury launched Soho Live, a daily livestreaming service focusing on all things luxury; Soho Mag, a content-rich channel with the latest fashion news and an upgraded membership program offering personalized services to high-value customers.

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