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Alibaba earnings boosted by China COVID lockdown spending

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Yahoo Finance Live anchors discuss quarterly earnings for Alibaba.

Video transcript


JULIE HYMAN: Well, let's talk about some movers ahead of the opening bell this morning. Alibaba is one of them. The company beat earnings estimates in its latest quarter despite the company facing macro challenges affecting supply chains, like we have seen, and consumer sentiment. Shares are up about 4 and 1/2 percent in US trading. You can see earnings per share beat. Revenue beat by a bit.

And basically, what you're seeing happen in China now is what happened in the US in most of 2020 and 2021, that is people stuck at home because of the lockdowns there. And they had to get stuff somehow. And so they turned to online malls like Alibaba, although I don't know how they got deliveries, because my understanding was that delivery people also weren't necessarily allowed to move around freely.

JARED BLIKRE: As I understand, it was a huge mess, and it still is. And there were close to revolts. And if there were, they were suppressed. I mean, I heard anecdotal, boots on the ground reports from people here who have friends over there, and they're simply incredible.

But something else that was different in China that was a little bit different from the United States is China's crackdown on tech. And Alibaba-- I like to follow Alibaba because they are the OG Chinese tech stock. They got the biggest the most quickly. Maybe Tencent was bigger at some time.

But you go back, and all of the trouble that Alibaba and the other tech giants had started with Jack Ma. And he was mouthing off. In my opinion, he got a little bit too bold. And the Chinese government weighed in. And they said Ant Financial, this huge company that Alibaba took on board-- and by the way, there's all kinds of interesting things that went on there behind the scenes. It looks like they unloaded a lot of shady assets in an SPV within Ant Financial.

They were supposed to offload all of that in an IPO, ship it to retail. That didn't happen. And what happened later? The assault that the Chinese government has made on the capital markets, forcing Didi to delist without a plan to delist, is incredible if you think about it.

So Alibaba, we'll go to the charts here in one quick second. Here's Alibaba down-- excuse me, it's up about 5%. I'm going to go to a one-year chart. And this is just from the upper right to the lower-- excuse me, upper left to the lower right. That is a steep downtrend, two years.

We didn't see the peak until-- I think this was 2020. This was the Ant Financial mess. And over the last 10 years, you're going to see some substantial-- no, it's flat. It's down 12% over 10 years.

Here's a max chart. I didn't even-- so I'll tell you what, it's down--

JULIE HYMAN: Yeah, fascinating.

JARED BLIKRE: --from its IPO.

JULIE HYMAN: I mean, and some of those regulatory pressures do seem to be easing to some extent. So that's something to watch.

JARED BLIKRE: The Chinese are easing too. That's important.

JULIE HYMAN: Right, no, that's what I'm talking about. Yeah, that's what I mean, that the Chinese regulatory pressure has eased a little bit, the crackdown on tech in that country.

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