3 Factors That Affected Alibaba's Revenue Growth In Q1

Shares of Alibaba Group Holding Ltd BABA collapsed on Wednesday to make new lifetime lows on back of the Chinese retail giant reporting its slowest growth in the last three years earlier in the day.

 

Hany Nada, GGV Capital co-founder and an early investor in Alibaba, was on CNBC recently to discuss the factors that affected the company's growth in the quarter.

 

3 Factors

 

"I am a long-term believer in Alibaba and what they are doing," Nada began. "I mean, venture capital by definition is a long-term game. The thing that I saw here were 3 factors that were affecting GMV growth or revenue growth, if you will. One was the mobile transition and, I think, they are doing a pretty good job at that, but there's still a gap between monetization of mobile versus desktop. The second is the Chinese economy which everybody has been talking about obviously."

 

He continued, "I think, that has also had an impact, but is not as big as most people think. I think, the third piece here -- which, I think, most people underestimate -- is the cleanup that Alibaba has been doing of its merchants over the last year or so. Since it started kind of cleaning up the bad merchants and the bad sales that they have had. I think, that's also had a big impact on the slowdown or the headwind, if you will, affecting GMV or revenue growth."


Playing A Long Game


Nada dismissed the assumption that the change of sentiments towards Alibaba is going to affect its future growth, saying, "The sentiment has changed dramatically since the company went public about a year ago. However, if you think about the game that Jack Ma and Joe and the team is playing, they are playing a long game."


"I think, international markets is going to be a very important market for them. I think, they are patient, they are going to take their time, they are going to enter those markets correctly, I think."

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