Alibaba finds itself under pressure to fend off rising rivals in China like JD.com from the market. As China “6.18” shopping festival approaches this year.
So far this year, Alibaba’s shares traded on the NYSE, have dropped 5.6 percent. While its Nasdaq-listed rivals JD.com have seen their stocks surge 44 percent. While the latest earnings from Alibaba fell ahead of forecasts, analysts say their development shows signs of plateauing in the midst of stepping-up competition. Under this backdrop, the organization plans to leverage 6.18 to improve sales and show that it can grow further.
“It’s a battlefield,” says Steven Zhu, a senior analyst at Pacific Epoch, a consultancy company based in Shanghai. “We will be seeking to capture market share under pressure from the declining share price.”
Alibaba last Friday told local media in China that promotions would kick off on June 1 and run for more than two weeks.
According to a report from the state-run Shanghai Securities News, it will set aside another 4 billion yuan ($560 million) in subsidies and discount vouchers, on top of the 10 billion yuan first announced in mid May.
The organization plans to host live streaming shows with over 100 celebrities selling multiple items on June.18 to further attract shoppers.
The advertising boom came after Alibaba last week posted. Better than expected 22 percent rise in revenue in the March quarter to $16.1 billion. The e-commerce firm expects sales this year to be at least $91 billion, a 27.5 percent leap from last year, but significantly smaller than the $92.3 billion estimate of analysts.
Furhtermore, the business said the Covid-19 pandemic continues to affect the Chinese economy and while providing guidance for the year, management cited similar macro-uncertainties.
But what scares investors most is that during the pandemic the rivals expanded faster. During the previous financial year. JD.com saw its customer base rise 25 per cent to 387.4 million. And this quarter it expects higher than anticipated revenue. JD.com benefited from a spike in internet orders for staples and other fresh produce due to an in-house. Distribution network that was up and running faster than many other shipping firms.
