Alibaba Shows A Red Flag

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About: Alibaba Group Holding Limited (BABA), Includes: AMZN, JD, KR, WMT
by: Bluesea Research
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Bluesea Research
Growth, tech, large-cap, research analyst
Summary

Alibaba reported strong year-on-year revenue growth of 40% in the latest quarter.

A big chunk of incremental revenue came from growth in New Retail initiatives like Freshippo where revenue is recorded at gross basis and has very low margins.

Removing the growth of New Retail gives Alibaba a YoY growth rate of 28%.

We will continue to see faster growth in New Retail as the company records sales in this segment on a gross basis.

Alibaba has a long growth runway but it is important to note the changes in the revenue mix to find the future EPS and valuation multiple.

Alibaba (BABA) reported strong revenue growth in the latest quarter. Compared to the year-ago quarter, Alibaba’s revenue grew by 40% to RMB 119 billion or $16.6 billion. At Alibaba’s scale, this level of