Alibaba revenue growth slows down in Q1, Yahoo stock value drops nearly 6%

18 Jun

China’s e-commerce giant Alibaba performed less well in Q1 compared to the previous quarter, according to the financial report attached to an updated IPO prospectus. The news greatly impacted its major shareholder Yahoo, whose stock value dropped nearly 6%.

According to CNBC and Wall Street Journal, Alibaba’s Q1 slow revenue growth—39%—can be attributed to its launch of Double Eleventh Shopping Festival on November 11 the year before. The success in sales diluted the revenue before and after Q4 of 2013. Alibaba’s 2013 Q4 revenue growth surged to 62% from 47% in Q3 but dropped again to 39% in Q1 of this year. Moreover, its investment to attract more mobile users also resulted in a drop in growth profit. The growth profit for Q1 was 45.3%, less than 51.3% of the same period last year.

The market responded violently at the news. The stock value of Yahoo, which holds 22.5% of Alibaba’s shares, dropped 5.77% to US 34.81 on June 16. Softbank, a large shareholder, also suffered stock value losses. Its stock value dropped 1.24% and closed at 7,673 Yen. Softbank holds 34.4% of Alibaba’s shares.

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The prospectus reveals another major problem. According to data, the profit of a transaction made on desktop computers is far higher than that made through mobile devices. In Q1, the profit earned through desktop transactions equaled to 2.6% of the gross market value. The profit made through mobile devices only accounted for 0.98%. The gap has put Alibaba at a disadvantaged position because more and more users are shopping through mobile devices and even if the transaction volume rise, the revenue growth could be weakening.

In the prospectus, Alibaba announced the names of 9 post-IPO board of directors, including its founder Jack Ma, its CEO Jonathan Lu and former Hong Kong Chief Executive Tung Chee Hwa. Alibaba will list on the New York Stock Exchange in the first half of August, according to undisclosed sources.

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