By Tracy Qu


Alibaba shares rose in Hong Kong, recouping losses from a day earlier as investors turned upbeat on its latest earnings release.

Shares were 7.0% higher at HK$85.30 Friday, after it dropped 3.6% Thursday in the wake of January-March earnings that showed a modest rise in sales alongside an 11% fall in adjusted net profit as the e-commerce giant ramped up investment to bring back growth.

The selloff "was unjustified in view of [the stock's] cheap valuation," Nomura analyst Jialong Shi said. Alibaba's forward price-to-earnings ratio stands at about 10.8, compared with Tencent's 18.0, according to Factset with Hong Kong-listed shares about 72% lower from their late-2020 peak

Chelsey Tam, a equity analyst at Morningstar, said that the increase in Alibaba's share price could also be influenced by overnight reports that several well-known investors including Michael Burry and David Tepper increased their stakes in the company in the first quarter.

Alibaba has ramped up investment in its major business units, hoping to boost revenue growth, which has slowed in recent quarters amid fierce competition with the peers such as JD.com and PDD Holdings. Alibaba has also cut prices of its cloud services in recent months and boosted spending on its fast-growing international e-commerce division.

Some of that might be paying off. Alibaba said this week that it expects its cloud revenue to return to double-digit growth in the second half of the 2025 fiscal year, and for the gross merchandise value of its core e-commerce unit Taobao and Tmall Group to gradually return to "healthy growth" during the year.

CCB International analyst Cathy Chan in a research note after earnings said she expects Alibaba's revenue growth to accelerate in the second half of fiscal 2025 as earnings recover. Double-digit gross merchandise value growth in the March quarter suggests the company's core e-commerce business is well on track, she wrote.


Write to Tracy Qu at tracy.qu@wsj.com


(END) Dow Jones Newswires

05-17-24 0243ET