Alibaba's strong earnings boosted by online sales amid coronavirus lockdown

Alibaba’s online sales skyrocketed in its quarterly earnings report. Yahoo Finance’s Jared Blikre weighs in on the latest financial results.

Video Transcript

ADAM SHAPIRO: We turn our attention to earnings. Want to talk about one of the companies in Asia that is all-important, Alibaba. They, along with John Deere, reported today they had positive news. But there are some concerns out there. Jared Blikre, why don't you kick it off and fill us in?

JARED BLIKRE: Sure thing. They beat on both their top and bottom lines. Nice beats, but it's all about the forecast. And they lowered their sales forecast for the year to 27 and 1/2%. That's from 35%, and also below-- slightly below analysts' estimates.

And while it posted a better-than-expected 22% rise in revenue for the quarter, this is the slowest pace of expansion on record. So everything is with a grain of salt here. They also face competition, increasing competition from ByteDance, which owns TikTok, and Pinduoduo.

And just looking at the chart here, we have a year-to-date, they've lost about 40% of their market cap from the start, or from their peak, down only 5% year-to-date. But if we look at our China heat map here, we saw a lot of turmoil overnight. Of course, Hong Kong being down, the Hang Seng being down 5 and 1/2% didn't do much to help the situation.

But here's a year-to-date look. And a lot of these stocks climbed into the green, because these are disruptor plays. You look at JD, up 43%, kind of a similar situation to Amazon. Pinduoduo up 74%. So we're sorting into winners and losers here.

And I think the other interesting aspect of this story is what's going to happen with their listing? Because we're talking about Baidu yesterday potentially withdrawing its NASDAQ listing in hopes of getting a better valuation. And that's due to the ongoing tensions, or the escalating tensions between the US and China.

Alibaba's CFO came out with a statement this morning, says that new law that the Senate is considering that would require enhanced auditing procedures and oversight for Chinese companies, they wouldn't be able to deal with that. So it doesn't look like they're going to voluntarily withdraw their listing. But it could be part of a growing trend here. So it'd be interesting to watch this as it evolves.

DAN ROBERTS: And guys, as Jared mentioned, the lower forecast from Baba is what's alarming to shareholders, of course. But there are a couple of figures that stood out to me in the earnings report. First of all, e-commerce is up 20%. Of course, online shopping was surging during the pandemic. So just like Amazon, Alibaba was already well situated to benefit from that. Not so surprising.

More surprising, the cloud computing business was up 60%. I mean, if I'm a shareholder in Alibaba, I'm pretty comforted by that figure. And it's a company that is poised to continue to do well. I mean, even if people are staying home-- now in China, things have reopened for a large part. But I think Alibaba proving that it's a business that can withstand something like what we have going on for the last three months.