Alibaba boosts share buyback plan, but stock falls on earnings

Chinese e-commerce giant Alibaba (BABA) reported third quarter earnings that beat analyst estimates, though revenue fell short. The company also announced a $25 billion increase in its buyback program. The stock, however, fell on lower average order value and concerns about slowing growth amid the overall slowdown of the Chinese economy.

Yahoo Finance’s Akiko Fujita and Rachelle Akuffo discuss the trending ticker.

Editor's note: This article was written by Eyek Ntekim

Video transcript

[AUDIO LOGO]

BRAD SMITH: It's time for some trending tickers here. This morning, we're tracking shares of BABA, Alibaba, after boosting its share buyback program by $25 billion. But the Chinese e-commerce giant did miss revenue estimates in the third quarter as it faced a slow economic recovery in the region.

There you're seeing shares pre-market, they are down right now by about 4.5%. One of the huge items that I think a lot of investors are focusing in on here, especially in this most recent quarter. And in the environment that we're continuing to hear come out of China where consumers are-- at the same time as there is more stimulus that is being evaluated to be pumped into the economy, consumers holding on to that a little bit more. Not being as willy-nilly to just go out there and spend all the cash.

But at the end of the day, one huge thing here-- they did see growth within Taobao and Tmall, about 2% year over year. GMV, which is that gross merchandise value, that achieved healthy year over year growth, they mentioned. Transacting buyers and order volume also growing strongly, they say. But a decrease in the average order value is something investors might be paying attention to here.

SEANA SMITH: Yeah, it certainly is. And I don't think it's by any really stretch, a surprise here, when we talk about the weakness that's playing out in the Chinese economy right now. The fact that the recovery has not taken place, at least to the degree that many forecasters had anticipated. You've seen names like Alibaba under pressure as a result.

And you were taking a look at a six-month chart, they're now really looking at a one year, with shares off just about 26%. When it comes to these numbers that we got out here this morning, the fact that they did announce that buyback program, $25 billion-- an increase of $25 billion to its buyback program, it's helping to offset some of the weakness within this report.

But again, their core domestic e-commerce business, that missed expectations. Also, the cloud business, talking about how they are reworking and restructuring parts of that division in order to focus on more of their higher margin-based contracts there, which would potentially help result going forward. But again, Alibaba under a bit of pressure here.