Proactive Investors - Alibaba Group (NYSE:BABA) slid over 7% on Wednesday after posting an 86% drop in profit for the first quarter.
Net income attributable to shareholders fell from 23.5 billion yuan to 3.3 billion yuan over the three months to March, the company reported on Tuesday.
This was despite revenue coming in higher than expected at 221.9 billion yuan, which was up 7% year on year.
According to the technology giant, the drop in net income was mainly due to “a net loss from [...] investments in publicly-traded companies,” following a gain a year earlier.
“Given the robust growth in sales, the shrinking profits will be very concerning for investors in the Chinese e-commerce behemoth,” eToro analyst Mark Crouch said.
Alibaba, which contended with a tough year in 2023 as it underwent a major corporate reshuffle, had signalled a US$25 billion boost to its buyback program earlier this month.
Crouch noted the increase in repurchases, which are set to carry through to March 2027, “may be helping to limit” the drop in share price.
However, “the magnitude of the slide in earnings, along with ongoing worries about Chinese consumer spending [mean] its shares could be contending with heavy selling pressure,” he added.
Shares fell 7.3% to US$78.39 following the update.