Startling Alibaba growth forecasts suggest Jack Ma’s data ambitions are on the right track

Source:Global Times Published: 2017/6/12 20:48:39

Jack Ma Yun's big data ambitions have gotten a stamp of approval from investors. Shares in Alibaba rocketed up 13 percent on Thursday - the group's biggest daily rise since going public - after the company revealed startlingly optimistic revenue growth forecasts during its annual investor conference. It's a powerful vindication of Ma's forays into AI and cloud technology.

Gasps and cheers were heard from the audience in Hangzhou when Alibaba Chief Finance Officer Maggie Wu said she expects revenue growth of up to 49 percent for the next fiscal year, trouncing the average 38 percent rise analysts on Eikon predicted. The bigger reaction came hours later, when investors added a jaw-dropping $41 billion in market value to the New York-listed behemoth. By the end of the day, Alibaba had taken the title of China's most valuable publicly listed company back from rival Tencent.

The signal from Alibaba is the strongest sign yet that the expensive bets the company placed outside of its core e-commerce business are starting to pay off. Ma has made wild and often unpredictable investments in areas like cloud computing, online video, supermarket chains, and mobile mapping to transform the company into a giant data and content platform. This vision is starting to come together: The other big reveal from Wu on Thursday was that users are spending much more time on Alibaba's shopping and entertainment sites and apps than before, and, as a result, spending more too.

The big question is when Ma's data and content bets will translate into profit. Alibaba disclosed last month that its cloud, media and other businesses made an operating loss of over 18 billion yuan ($2.6 billion) in the fiscal year on 24 billion yuan of revenue. Wu has already assured investors that Alibaba's core e-commerce margins will not be impacted too much. Given the high expectations, that may not be enough for long.

The author is Robyn Mak, a Reuters Breakingviews columnist. The article was first published on Reuters Breakingviews. bizopinion@globaltimes.com.cn

Posted in: INSIDER'S EYE

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