The Chinese e-commerce super-giant, Alibaba Group Holdings Ltd. (NYSE:BABA), posted their first quarter financials for the 2018 year this morning. Alibaba Group shares hit a peak on June 14th around $211 per share. Since then, Alibaba Group shares have declined to lows of 21% at $165.70 a share. Analysts and other news outlets suggest this price action coincides with the growing tensions between U.S.-China trade relations.
On Tuesday, August 23, 2018, Alibaba Group reported an expectation-beating first quarter, which was aided by growth in its e-commerce and cloud divisions. Revenue expectations were beat with revenue for Q1 2018 at 80.92 billion yuan, up 61% year-over-year. Additionally, earnings per share is up to 3.30 yuan from 2.79 yuan. On a less positive note, net income was reported down 40.8% year-over-year, coming in at 8.69 billion yuan.
Alibaba Group’s core commerce can be thanked for most of the company’s growth, bringing in around 86% of revenues. The company operates online marketplaces such as Taobao and Tmall which are similar to Amazon’s e-commerce platform.
The company’s cloud computing focus also has brought in significant revenue, compared to last year, totaling at 4.7 billion yuan which is 93% up year-over-year.
Alibaba Group was formed in 1999 and achieve profitability just two years later. Since then, Alibaba Group and its subsidiaries, have grown to be comparable to the “Amazon of China.” The company offers online and mobile commerce “products, services and technology that enable merchants, brands and other businesses to transform the way they market, sell and operate in the People’s Republic of China and internationally.”
Many analysts are concerned with the outcome of tariffs and other trade regulations put forth by the tensions between the U.S. and China. Although tariffs may affect Alibaba selling internationally in the U.S., it will not affect their growth in China alone, which is their primary market.