Angela Moh of Morgan Stanley on Monday commented in a note that Alibaba Group Holding Inc's (NYSE: BABA) monetization rate decline in the third quarter remains a key focus and cause of confusion for investors since the company reported its earnings last week.
Moh notes that consumer-to-consumer gross merchandise volume acceleration, especially in mobile, could have resulted in more “free” consumer-to-consumer gross merchandise volume for merchants and the deceleration in business to consumer gross merchandise volume and commission growth.
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Moh also states that the business-to-consumer rate commission rate change year-over-year was “fairly muted”, in indication of little mix shift year-over-year in the quarter. However, the commission rate had increased in the three prior quarters due to sales of virtual items (such as lottery and travel) and higher-margin products.
Finally, Moh believes that the combination of higher organic search, better conversion and increasing growth of long-tail key words resulted in flat year-over-year PC revenue growth and lower PC monetization rate in the quarter.
The analyst believes that most of the impacts are temporary and that better consumer discovery and improving merchant conversion rate could drive “robust” gross merchandise volume growth.
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