Alibaba is finally opening up its cave to outsiders. The Chinese e-commerce giant has promised to shed more light on the financial performance of a range of businesses. That’s a relief for investors worried about a U.S. accounting probe. A better-than-expected revenue forecast also helped ease concerns about slowing sales.
The $192 billion behemoth has just hosted its first investor conference since going public almost two years ago. Boss Jack Ma and other executives took the stage at the company’s Hangzhou headquarters to address issues ranging from counterfeits to the group’s strategy and overarching vision. They also said Alibaba would start disclosing financial results for four key segments: its core marketplace business, cloud computing, mobile and entertainment and other initiatives.
The shift is overdue but welcome. Investors have long had a reasonably clear financial picture of Alibaba’s core shopping platforms. But Ma’s sprawling empire now includes stakes in a smartphone maker, a soccer club and a Hong Kong newspaper. In the year to March, Alibaba invested 54.5 billion yuan ($8.4 billion) in food delivery, virtual reality and other bets. Meanwhile, its share of losses from affiliates topped 1.7 billion yuan for the same year.
This lack of clarity has attracted the attention of the U.S. Securities and Exchange Commission, which is investigating the company’s accounting practices, amongst other things. The probe’s main focus appears to be whether Alibaba should consolidate the $7.7 billion Cainiao Network, a logistics company in which it holds a 47 percent stake. Until May this year, outsiders were in the dark about this loss-making venture. Now, Alibaba will break out revenue and net loss figures for Cainiao and other major investments.
The mood in Hangzhou was further brightened by Alibaba’s revenue guidance for the next year – another first for Ma. The company expects sales for the next fiscal year to increase 48 percent – well above the forecast mean of 39 percent, according to analysts polled on Eikon. Even after excluding new businesses that Alibaba bought this year, that means the company expects sales growth to accelerate.
Shares of the U.S.-listed Alibaba have fallen almost 10 percent in the past year amid concerns of slowing growth. Alibaba’s new openness is a much-needed olive branch for investors.
