Alibaba (NYSE: BABA) shares soared after the company reported market-beating earnings in the three months ended December, with investors content with a record amount of spending by the company in the 2018 calendar year, hoping that it will spur future growth.
The Chinese e-commerce giant posted its slowest revenue growth since 2016 in its fiscal third quarter, but net income beat estimates.
Apparently, the company has had to contend with a slowing Chinese economy and the ongoing U.S.-China trade war. One area the market was focused on is spending by the company, with some analysts thinking that Alibaba could reign in expenditures because of the tougher operating environment.
But the company ended up spending a record amount in 2018 — something that the market was happy with. Over 278.8 billion yuan, or $41.6 billion, was spent on product development, sales and marketing, general administration and cost of revenue last year, an 86.2% increase in renminbi terms from 2017, when the company splashed out 149.7 billion yuan.
Alibaba finance chief Maggie Wu said the profitability from the company’s core commerce business allowed it to generate the money to continue to invest.
"This profitability and $7.5 billion in free cash flow generated this quarter enable us to continue to invest in other important strategic businesses and technology to support the growth of our ecosystem," Wu said in the earnings release on Wednesday.
Shares gained $1.66, or 1%, to $168.46 early Thursday.
Tech Insider
