BABA Stock Drops, to Invest $1 Billion Next 3 Years to Increase Cloud Customers


BABA stock price was at $78.81 on Friday at 03:59 PM EDT 

After announcing plans to spend up to $1 billion over the next three years “for a worldwide partner ecosystem update” and to support its cloud computing clients in an effort to spur growth, BABA stock(NYSE:BABA) shares declined on Friday.

Alibaba, the Chinese e-commerce behemoth looking to restart growth after a historical slump, announced it will invest $1 billion over the next three fiscal years to serve its cloud computing customers.

Alibaba stated in a press release on Thursday that the investment consisted of “financial and non-financial incentives, including cash, rebates, and go-to-market activities.” According to the business, a program will soon be established to assist customers in tailoring their cloud computing demands to the regional market.

4.1% Drop In Alibaba Stock Hurt Both Institutional And Individual Investors Last Week

According to Gartner, after Amazon and Microsoft, Alibaba is the third-largest cloud computing operator in the world. Alibaba’s management believes that cloud computing will be essential to the company’s growth and profitability, even if it currently accounts for a very tiny portion of its entire business.

Due to Covid’s revival in the second-largest economy in the world and tighter domestic regulations, Alibaba has experienced an unparalleled pause in growth amid the economic downturn in China. Alibaba posted its first flat sales growth ever in the April to June quarter.

Additionally, the company’s cloud computing division’s revenue growth decreased from the prior quarter. The announcement of the investment by Alibaba is also a part of a larger effort by the corporation, which has its headquarters in Hangzhou, China, to grow its cloud computing business internationally.

Alibaba has established new data centers outside of China in recent years in an effort to attract clients in places like Singapore and Thailand.

BABA stock, Financials, Forecast

Alibaba’s stock increased after it released fiscal first-quarter results on Thursday that exceeded expectations. The U.S.-listed stock of the Chinese e-commerce behemoth increased up to 6% and ended the session 1.8% higher. Here is how Alibaba performed in its first fiscal quarter compared to Refinitiv consensus forecasts:

Revenue remained stable year over year at 205.55 billion Chinese yuan ($30.68 billion), compared to the predicted 203.19 billion yuan. Earnings per American depositary share (ADS): 11.73 yuan, down 29% year over year from the predicted 10.39 yuan. Net income was 22.73 billion yuan versus expectations of 18.72 billion yuan. Alibaba exceeded expectations, yet this was the first time in its history that it had flat growth.

Featured Image-  Megapixl @ RobertWei

Please See Disclaimer

About the author: I'm a financial freelance writer keen on the latest market developments which i articulate with writing stock updates, press releases and investor news. As a person i live by the code of a sustainable human existence and a carbon neutral universe. When off work, i spend time reading non-fiction books, flying drones, and outdoor cycling.