Alibaba’s Lost Magic Is a Warning for the Future
Digital entertainment and cloud computing were supposed to benefit from the pandemic. They didn’t.
Strong demand didn't materialize from the stay-at-home economy.
Photographer: Noel Celis/AFP/Getty Images
Although it’s not surprising that China’s Alibaba Group Holding Ltd. has joined a long list of global consumer companies that took a hit from the Covid-19 pandemic, the details of its March-quarter earnings indicate that its struggles may not be over after the crisis subsides.
Consider online commerce, which investors might expect to benefit from customers being stuck at home. In fact, commissions dropped while ad revenue climbed, with a net result of just 2% growth in a sector that counts for around half of annual sales. Counterintuitively, the consumer segment that did manage solid growth was its physical retail businesses such as groceries.