Chinese consumers are wary. Alibaba's sales miss forecasts

By Paul R. La Monica, CNN BusinessUpdated: Thu, 17 Nov 2022 15:23:38 GMTSource: CNN BusinessThe Chinese consumer is still under a lot of pressure. E-commerce giant Alibaba reported third quarter sales

By Paul R. La Monica, CNN Business

Updated: Thu, 17 Nov 2022 15:23:38 GMT

Source: CNN Business

The Chinese consumer is still under a lot of pressure. E-commerce giant Alibaba reported third quarter sales Thursday that rose just 3% from a year ago, slightly missing analysts' forecasts.

Alibaba has been hit hard this year due to a slowdown in China's economy. The pandemic has weighed on sentiment and Chinese shoppers have pulled back on spending as a result.

The company did report a profit that topped expectations and also announced plans to boost its stock buyback plan. That appeared to soothe hard hit Alibaba investors somewhat.

Shares of Alibaba rose more than 6% in mid-morning trading but they have still plunged about 30% in 2022. Alibaba rival, which will report earnings on Friday, are down about 25% as well.

Chinese consumers apparently didn't splurge too heavily during last week's Singles Day shopping extravaganza either. The 11/11 online commerce event is sort of like Black Friday for Chinese consumers.

But Alibaba said in a press release a day after 11/11 that this year's Singles Day results were simply "in line with last year's...performance despite macro challenges and Covid-related impact."

Alibaba chairman and CEO Daniel Zhang said during a conference call with analysts Thursday that there are also many challenges facing Alibaba beyond the "the ongoing resurgence of Covid-19." He noted that "geopolitical tension, inflation and currency depreciation...created considerable difficulties" for Alibaba as well.

There are ongoing worries about the contentious trade relationship between the United States and China...although President Biden and Chinese leader Xi Jinping both stressed at this week's G20 meeting that the two superpowers should try and avoid more conflict.

Alibaba has also been hit by more intense competition in its home market, including upstart e-commerce site Pinduoduo as well as from social media platforms like ByteDance, the owner of the short form video global phenomenon TikTok and the Chinese version, known as Douyin.

A slowdown in Alibaba's massive cloud computing business is also weighing on growth. Alibaba said that cloud revenue grew just 4% from a year ago in the latest quarter, down from a 10% increase in the previous quarter.

Alibaba faces tough cloud compeititon from American tech giants Amazon, Microsoft and Google owner Alphabet.