Ali regained the initiative.

It's hard to keep it up.

Source: Wall Street author | Liu Baodan

Editor | Zhou Zhiyu

The e-commerce market is still in a big reshuffle, and Alibaba has made a lot of investment in order to maintain its market position under the attack of pinduoduo, Douyin, JD.com and other rivals. Now Ali can finally breathe a sigh of relief.

On May 14, Alibaba Group released Q4 and annual results for fiscal year 2024. In the current quarter, Ali achieved revenue of 2218.Highrollervideopoker.7.4 billion yuan, an increase of 7% over the same period last year, and an increase of 5% over the same period last yearHighrollervideopokerAmong them, Taotian's income reached 93.216 billion yuan, an increase of 4% over the same period last year, changing the declining trend of the same period last year and returning to growth.

A more positive sign is sales growth. This quarter, Taobao Tmall achieved double-digit GMV growth, compared with Taobao Tmall's GMV growth rate declined in the same period last year. After a year of development, Taobao Tmall's sales are back to double-digit growth, which also means that Taotian is regaining the market initiative.

In addition, Ali's conquest of cities and territories in the international market has also achieved initial results, with Ali International and Cainiao achieving income growth of 45% and 30% respectively this quarter. The core Aliyun revenue growth rate of 3%, especially AI-related revenue recorded triple-digit year-on-year growth.

As for Ali's local life, the income growth rate in the current quarter is 19%. After Yu Yongfu steps down as chairman, the follow-up trend of the business will be the focus of attention; the only decline in Ali's six major businesses is big entertainment, with revenue falling slightly by 1%.

Over the past year, Ali has undergone structural and personnel adjustments. After Wu Yongming came to power, Ali's future strategy has become clearer and clearer, that is, to focus on Taotian and Aliyun, especially to increase investment in improving user experience, and to support Taotian Group to regain its growth and consolidate its market leadership position.

Ali should strive to maintain its share and growth in the e-commerce market. To this end, Ali has increased its tilt to Taotan in terms of personnel and resources, even at the expense of a certain amount of profit growth.

In fact, when Wu Yongming took over Taotian at the end of December last year, he set up a new young team, and he also transferred Wu Jia, president of Ali Intelligent Information Business Group, and Xianyu, the founder of Taotian, to important positions.

In order to regain users' love for Taobao, Taobao recently launched a series of measures, including cancellation of pre-sale, refund only, unlimited return of 88VIP, free delivery and so on. In order to attract the attention of users, Taobao announced the addition of tens of billions of cash and hundreds of billions of traffic plus content e-commerce.

This is also reflected in profit performance. According to the financial report, Taotian adjusted EBITA to 38.501 billion yuan this quarter, down 1% from the same period last year. This is mainly due to Taotian's increased investment in user experience and technology infrastructure.

Although market competition has eroded profit growth, it is a top priority for Ali to win users and the market, which is what Ali management wants.

On the performance call that night, Wu Yongming said that Taotian Group's "user first" strategy was effective, and the investment around price power and user experience received positive feedback from consumers, and the strong growth in the number of buyers and purchase frequency in the quarter contributed to the strong double-digit growth of GMV.

Next, Ali will continue to implement strategic focus. "improving commodity competitiveness, efficiency, customer service and consumer experience, thereby driving GMV growth and user consumption frequency, is our top priority this year," Alibaba management said.

After a sharp decline in market share and the market capitalization was briefly surpassed by pinduoduo, Ali is trying to get out of the trough and regain confidence in future performance growth. On the conference call, Ali's management rarely gave very clear performance guidelines.

Ali expects that the improvement of e-commerce user experience will promote the strong growth of domestic GMV in fiscal year 2025, while overseas e-commerce will maintain the momentum of rapid growth. Driven by AI and overseas e-commerce, the group's revenue will return to double-digit growth in the second half of fiscal year 2025.

Capital markets are also revaluing Ali. The share price rose sharply three days after the results were released. On May 17, Ali US shares closed up 7.05%, a six-month closing high. A number of financial institutions also expressed confidence in Ali. Goldman Sachs and Bank of America Securities both raised Ali's target price. Goldman Sachs stressed that Alibaba performed steadily and resumed growth in fiscal year 2024.

A number of well-known investment institutions began to bless Ali. Hedge fund legends David Tepper, Duan Yongping, well-known hedge fund managers and Michael Burry Management, the protagonist of the movie "Big short", all increased their holdings in Ali in the first quarter. 13F submitted by Appaloosa managed by David Tepper showed that this quarter significantly increased their holdings in Alibaba to 11.25 million shares.

However, although a series of counterattack policies of Ali have achieved initial results, the e-commerce market is in the process of continuous dynamic development, and the challenges faced by Ali can not be underestimated.

On the one hand, social consumption is in the doldrums, and consumers' shopping tends to be rational; on the other hand, competitors, including JD.com, Douyin, pinduoduo, Kuaishou and so on, are also making continuous efforts. For example, Douyin e-commerce has launched a low-price strategy, strongly recommending low-cost products in malls and short videos; JD.com also regards "content ecology" as its strategic direction in 2024.

E-commerce has entered the red sea of competition, and every growth of Ali means grabbing food from its competitors. This long and cruel business game will continue to evolve in practice, and Alibaba has more battles to fight.

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