Alibaba china driver#
Alibaba china full#

Because of Chinese cities going back into lockdown, I believe that we are going to see a wave of revenue estimate down-grades for Alibaba which is set to result in new pressure on Alibaba’s valuation factor. Due to COVID-19 restrictions in Chinese cities earlier this year, Alibaba’s growth prospects in its integrated e-Commerce operations has been stunted and the logistics business may see delayed profitability because of it.Īlibaba: Cainiao FQ1'23 Segment Results Top line estimates are set to drop furtherĪlibaba’s revenue growth already slowed to 0% in the last quarter, but that doesn’t mean it can’t get worse.

Alibaba china driver#

Two years ago, Cainiao was a growth driver for Alibaba, showing top line growth in excess of 50%. Cainiao, which is Alibaba’s logistics enterprise that works behind the scenes to get parcels to customers, has seen a severe slowdown in revenue growth to just 5% year over year in FQ1'23. New lockdowns in Chinese cities are therefore set to hurt Alibaba’s growth prospects further, especially in the e-Commerce and the logistics segments. Supply chain issues have their root in the unprecedented shutdowns of manufacturing facilities at the onset of the COVID-19 pandemic and ripple effects are felt throughout the world to this day. Unfortunately, China’s new lockdown measures are set to make supply chain problems worse. Seven provincial capitals are also under varying levels of lockdowns.

Alibaba china full#

According to Caixin Global, 33 cities and 65 million people are currently affected by full or partial lockdowns, including Chengdu, a city of 21 million, which was locked down completely. If China’s commerce business is not doing well, neither is Alibaba.Īlibaba: FQ1'23 Revenue Breakdown New, broad-scale lockdowns are a problem for AlibabaĬhina’s health authorities have announced major shutdowns in August and September to control the spread of COVID-19. Local Consumer Services had a revenue share of only 5% in FQ1’23 while China commerce generated 69% of consolidated revenue. which is why a slowdown in the main China commerce business is a big problem for the e-Commerce company.

Although Alibaba saw some positive momentum in Local Consumer Services, such as Direct Sales and China wholesale, the segment is not big enough yet to make a real difference for Alibaba. Alibaba’s China commerce revenue growth actually declined 1% year over year in FQ1’23. In FQ1’23, Alibaba’s top line growth slowed to 0% as a new round of COVID-19 lockdowns affected Alibaba’s e-Commerce and logistics operations negatively. Alibaba reported its weakest growth on record in FY 2022, due to a slowdown in the Chinese economy. For this reason, I expect the e-Commerce company to report its first-ever quarter of negative consolidated revenue growth in FQ2’23 and revenue estimates to trend lower! COVID-19 measures are posing a fundamental risk to Alibaba’s growthĪlibaba’s growth has already slowed down markedly this year, in large part because of COVID-19 lockdowns in China, which included mega-cities like Shanghai and Beijing. With millions of people once again limited in their ability to travel freely and to go to work, these new lockdowns are certain to affect large e-Commerce companies like Alibaba ( NYSE: BABA ) in a negative way. Chinese health authorities have imposed sweeping lockdown measures on many cities across the country lately in a bid to stamp out COVID-19 infections.