D.E. Shaw reveals new position in Alibaba
D.E. Shaw bought new positions in Alibaba Group Holding Limited (BABA) and Liberty Media Corporation (LMCK). Notable position decreases were in WellPoint (WLP), Rackspace Inc.(RAX), and Potash Corporation of Saskatchewan (POT). The fund increased positions in Hewlett-Packard Company (HPQ) and Pfizer, Inc. (PFE) and decreased positions in AbbVie (ABBV), SanDisk Corporation (SNDK) and Occidental Petroleum Corporation (OXY).
D.E. Shaw revealed a new position in Alibaba in 3Q14 that accounts for 0.49% of the fund’s total 3Q14 portfolio.
Alibaba (BABA) is the largest online and mobile commerce company in the world in terms of gross merchandise volume. Founded in 1999, the company provides the fundamental technology infrastructure and marketing reach to help businesses leverage the power of the Internet to establish an online presence and conduct commerce with hundreds of millions of consumers and other businesses.
Revenue grows by 54% while net income declines
Revenue for the quarter ended September 30, 2014, was 16,829 million renminbi ($2,742 million), an increase of 53.7% compared to 10.95 billion renminbi in the corresponding quarter of 2013. The continuing rapid growth of China commerce retail business drove this increase.
Net income in the quarter ended September 30, 2014, decreased by 38.6% due to the share-based compensation charges, increased amortization expense, and an increase in effective tax rate.
Revenue from China commerce retail business in 3Q14 was $2.08 billion, or 75.9% of total revenue, an increase of 47.7%. The increase was driven mainly by the growth in online marketing services revenue and commission revenue.
Gross merchandise volume (or GMV) transacted on China retail marketplaces increased by 48.7%, primarily due to an increase in the number of active buyers. Mobile revenue increased as a result of increased mobile GMV and an increased mobile monetization rate, which represented 29.1% of China commerce retail business revenue.
Increases in monthly active users accessing the platforms through mobile devices drove Mobile GMV growth.
Revenue from China commerce wholesale business increased by 39.15% due to an increase in paying members and an increase in average revenue from paying members. International commerce retail business revenue doubled due to an increase in GMV transacted on AliExpress.
Alibaba’s management noted, “We delivered a strong quarter with significant growth across our key operating metrics. Our business continues to perform well, and our results reflect both the strength of our ecosystem and the strong foundation we have for sustainable growth. On our China retail marketplaces, gross merchandise volume for the quarter increased 49% and annual active buyers increased 52% year on year. We extended our unrivaled leadership in mobile with 217 million monthly active users on our mobile commerce apps in September and $95 billion in mobile GMV for the twelve months ended September 2014. We are also encouraged by continued improvement of mobile monetization which demonstrates the strong commercial intent of our users.”
Alibaba Group generates $9.3 billion in GMV on 11.11 Shopping Festival
The 11.11 Shopping Festival began in 2009 with 27 merchant participants as an event for Tmall.com merchants and consumers to raise awareness of the value in online shopping. This year, more than 27,000 brands and merchants participated in the event, including Costco, Muji, Desigual, ASOS, and The North Face.
By expanding globally with the participation of AliExpress and Tmall Global, consumers from more than 217 countries and regions were able to select from more than a million products through online storefronts and e-commerce websites. Total GMV settled through Alipay was $9.3 billion in 2014, which surpassed the total GMV of $5.8 billion in 2013.
Alibaba creates Alitrip to enhance online travel business
Alibaba (BABA) announced that its online travel business, Taobao Travel (trip.taobao.com), will become an independent business and brand named Alitrip. Like Taobao Marketplace, Tmall.com, and Juhuasuan, Alitrip will be another marketplace platform under Alibaba Group with a new independent web domain, www.alitrip.com.
The company said that this independent online travel platform is a logical extension of Alibaba Group’s strategy and is an opportunity to build Alitrip into a leading platform for China’s online travel sector.
Alibaba’s strategic investment in Shiji Information Technology
Alibaba (BABA) has agreed to invest 2.81 billion renminbi in Beijing Shiji Information Technology Co. Ltd., a China-based hotel information technology provider, in return for a 15% stake. After completion of the transaction, Alibaba Group will have one board seat on the board of directors of Shiji Information and will work together to connect the systems of Taobao Travel vertical with Shiji Information’s systems to strengthen Alibaba Group’s service capability in the online travel market.
The next section of the series reviews D.E. Shaw’s new position in Liberty Media Corporation (LMCK).