Alibaba Group Holding Ltd (ticker: BABA) investors got some great news on Thursday morning after the Chinese e-commerce giant issued fiscal 2018 revenue guidance that handily topped consensus analyst expectations. At the company’s investor conference, Alibaba CFO Maggie Wu says the company is anticipating revenue growth between 45 and 49 percent in fiscal 2018, well above analyst forecasts of 37 percent growth.
While other areas of China’s economy have shown signs of trouble in recent years, e-commerce growth remains robust. Last year, the total number of online shoppers in China grew 13 percent to 467 million, according to official statistics.
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Alibaba stock initially jumped more than 10 percent on the news and is now up 79 percent in the past year. Shares of Chinese e-commerce rival JD.Com ( JD) also rose 4 percent following the Alibaba news and are now up 95 percent in the past year. Yahoo ( YHOO), which holds a 15 percent stake in Alibaba, was up 8 percent on Thursday morning.
During her speech, Wu revealed that roughly 60 percent of Alibaba’s total revenue comes from its Alimama advertising platform, on which advertisers can bid for listing space on Alibaba’s websites.
“We’re not holding a gun to merchants’ heads to make revenue grow,” Wu says. “It’s all determined by merchants. They bid for every single click.”
The encouraging guidance beat from Alibaba coupled with surprisingly strong Chinese import and export data from the month of May may have eased investor fears over economic deterioration in China. Chinese exports grew 8.7 percent in May, while imports grew 14.8 percent, according to official data released on Thursday. Last month, Moody’s Investors Service downgraded China’s credit rating due to the nation’s rising debt levels and slowing growth.
China’s economy grew by 6.9 percent in the first quarter of 2017, while the U.S. economy grew by just 1.2 percent.
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Wu’s 2018 projections for Alibaba generated “gasps of wow” from investors, according to a Financial Times report. Needham & Co. analyst Kerry Rice calls the new Alibaba guidance “robust” and raised her price target for the stock from $140 to $155.
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Alibaba Group Holding Ltd (BABA) Guidance Surprises Wall Street originally appeared on usnews.com
