Yahoo Slumps After Alibaba Reports Shrinking Margins
Yahoo! Inc. opened in the red today, after Alibaba updated its IPO filing, reporting shrinking operating margins
Yahoo! Inc. (YHOO) is down almost 6% during trading after Alibaba filed an updated F-1 prospectus today, reporting that its operating margins had declined. Alibaba’s filing also named partners who will be controlling the Chines e-commerce company. The controlling group includes Alibaba Chairman Jack Ma, Vice Chairman Joseph Tsai, Yahoo’s co-founder Jerry Yang, and former Goldman Sachs employee Michael Evans.
Alibaba, the largest online wholesale marketplace in China, also disclosed its financials in the updated filing, disclosing how much business its websites, Taobao and Tmall, had done over the past eight quarters. The company recorded gross merchandise volume of $248 billion in Chinese marketplaces in FY13, with number of orders for the year coming in at 11.3 billion. Alibaba boasts 231 million active users, with 49 orders on average per user.
Alibaba’s revenues increased 72.4% over the previous year to $5.55 billion in FY13. In its latest fiscal quarter, the Chinese e-retailer saw its operating margin contract six percentage points year-over-year to 45.3%. Yahoo, with a 22.5% stake in Alibaba, witnessed significant declines pre-market after the updated filing revealed shrinking margins for Alibaba.
Alibaba said its margins had contracted on the back of higher marketing expenditure that was specifically targeted toward smartphone users. The company reported global mobile gross merchandise volume (GMV) in FY13 at $37 billion, and has 136 million monthly active mobile users. Transactions via mobiles represented 27.4% of all transactions for Alibaba in FY13, up from 10.7% the previous year. Mobile GMV also increased to 19.7% of total GMV in 2013, up from 14.7% the previous year.
Alibaba is expected to start trading in the US later this year. The e-retailer’s initial public offering (IPO) is expected to be one of the largest ever in the US, with funds expected in excess of $20 billion.