Alibaba Group Holding Ltd (NYSE: BABA) reported another quarter of impressive e-commerce and cloud services growth on Thursday, sending shares of BABA stock 3.5 percent higher in pre-market trading.
Alibaba demonstrated it is not being severely impacted by the trade war between the U.S. and China, and analysts say BABA stock remains one of the best ways for U.S. investors to gain exposure to long-term economic growth in China.
Alibaba reported fiscal first-quarter adjusted earnings per share of $1.22 on revenue of $12.22 billion. Both numbers topped consensus analyst expectations of $1.21 and $11.76 billion, respectively. For the second consecutive quarter, revenue was up 61 percent compared to a year ago.
Alibaba reported core commerce revenue of $10.4 billion, up 61 percent. Cloud computing revenue surged 93 percent to $710 million in the quarter.
Digital media revenue was up 46 percent to $903 million. Revenue from innovation initiatives was up 64 percent to $160 million.
Alibaba reported 634 million mobile monthly active users in the quarter, up by 17 million in the past three months. The company reported 576 million annual active consumers on its retail marketplace, an increase of 24 million on the quarter.
Operating margin once again took a hit, dropping to 10 percent in the first quarter from 35 percent a year ago. Alibaba said a rise in Ant Financial share-based compensation expenses were primarily to blame for the decline in operating margin.
“Alibaba had another excellent quarter, with significant user expansion and even more robust engagement across our growing ecosystem,” CEO Daniel Zhang says in a statement.
Alibaba’s 61 percent revenue growth once again outshone the 39 percent revenue growth American counterpart Amazon.com ( AMZN) reported in July.
Alibaba has previously guided for full-year fiscal 2019 revenue growth of 60 percent.
BABA stock initially traded higher by 3 percent following the earnings beat. Morningstar analyst R.J. Hottovy says BABA stock is “one of the most attractive ways to play long-term Chinese consumption and mobile technology trends.”
“While we view the Taobao and Tmall marketplaces, Cainiao, and Alipay as Alibaba’s core cash flow drivers, we also believe Ant Financial, AliCloud, globalization, and digital entertainment offer long-term potential,” Hottovy says.
Morningstar has an “undervalued” rating and $240 fair value estimate for BABA stock.
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Alibaba Group Holding Ltd (BABA) Is Growing Faster Than Amazon originally appeared on usnews.com
