Alibaba Group Holding Ltd. (BABA) Stock Price Jumps After Q2 Revenue Surges 54%

Alibaba Group Holding Ltd. shares jumped over 4 percent on Tuesday after the Chinese e-commerce giant posted quarterly earnings that were in line with expectations. Meanwhile, revenue surged 54 percent from a year earlier, mainly driven by growth in online marketing service and commission revenue.

During its earnings call with shareholders, Alibaba made a huge revelation on how it may try to take on Google Inc. in China. The company’s Executive Vice Chairman Joe Tsai said the Chinese e-commerce giant is planning a "long-term" effort to build out its experimental mobile phone operating system to become a competitor to Google’s Android operating system.

“The dominant player today may not be the dominant player tomorrow,” Tsai said.

For the July-to-September period, Alibaba reported a fiscal second-quarter profit of $494 million, or 20 cents per share, on revenue of $2.74 billion. Excluding items, Alibaba turned in a profit of 45 cents a share, in line with analysts’ estimates. Wall Street had expected the company to post a profit of $1.19 billion, or 38 cents a share, on revenue of 2.64 billion, according to analysts polled by Reuters. The company reported net income of $707 million on revenue of $1.73 billion during the same period a year ago. This is Alibaba’s first quarterly earnings report since the company’s record breaking $25 billion IPO in September.

“We delivered a strong quarter with significant growth across our key operating metrics,” Jonathan Lu, chief executive officer of Alibaba Group, said in the company’s earnings report. “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.”

Analysts were watching for a few key things within the report to see if Alibaba could live up to the hype -- whether the company could beat Street estimates and if the company would divulge its roadmap for the future.

“Is Alibaba able to meet Wall Street’s lofty expectations and what is their road map for the future? Those are the two things I’m watching for from them. If they are able to deliver earnings, now you have a lot of attention on whether Alibaba can continue to grow at the same pace as the last decade and what strategic acquisitions they’re going to make,” said Adam Sarhan, CEO of Sarhan Capital.

The e-commerce company is still facing an uphill battle concerning how it will make a footprint in the U.S. market, as giants such as Amazon.com, Inc. dominate the retail space, with Google and Apple Inc. leading the Internet and mobile space. Regarding Alibaba’s merger-and-acquisition strategy, Tsai was clear that they are laying the groundwork for a “long term winning strategy.” When it comes to Alibaba’s M&A plan, Tsai said the company is looking for three things -- opportunities that will add more users and additional engagement, something that will improve customer experience and an opportunity to add product service categories.

“Alibaba’s market is always going to be strongest in the Chinese market, as long as the economy survives,” said Martha Stokes, chartered market technician and chief executive officer of TechniTrader. “But the numbers to me are a little concerning because the growth isn’t as spectacular as they’re making it out to be.”

Shares of Alibaba closed Tuesday’s trading session up 4 percent to close at $106.07 on the New York Stock Exchange.