February 24, 2023: Alibaba stated the revenues for its fiscal third quarter smashed anticipated, shipping the tech giant’s U.S.-listed shares 6% higher.

Around $600 billion is wiping off the value of Alibaba from its peak in October 2020. A tightening regulatory atmosphere on tech firms in China, along with strict Covid-19 control rules and a subsequent economic slowdown, reaches the e-commerce giant.

Alibaba shares in Hong Kong closed higher ahead of earnings on Thursday. Investors bet China’s economic reopening will help boost consumer sentiment and spending, ultimately aiding the e-commerce giant. In the December quarter, China abruptly ended its strict Covid controls, like lockdowns, although this is not likely to be wholly reflected in the quarter.

Therefore, China’s regulatory tightening of the past two years is starting to ease as enforcement of the rules becomes more predictable.

The China commerce division’s earnings from Alibaba’s most prominent business, including its popular marketplace Taobao, totalled 169.99 billion yuan, down by 1% yearly. The drop was driven by the 9% year-on-year refusal in customer management revenue from services like marketing that Alibaba is selling to merchants on its Taobao and Tmall e-commerce platforms.

Alibaba stated that gross merchandise volume or the value of transactions across the firm’s online shopping platforms “declined mid-single-digit yearly, mainly due to soft consumer demand and ongoing competition and a surge in COVID-19 cases in China that outcome in supply chain and logistics disruptions in December.”

The firm said it sees a rebound in China’s economy and consumption.

“Looking ahead, we anticipate a continued recovery in consumer sentiment and economic rules,” Daniel Zhang, CEO of Alibaba, said.

Between a slowdown in its China activity, Alibaba has sought development in overseas markets via its Southeast Asia business Lazada and global e-commerce site AliExpress. International commerce revenue grew 18% yearly to 19.47 billion Chinese yuan.

Analysts expect Alibaba to see faster earnings growth over the coming quarters as the complete effect of the Chinese economic reopening is felt. In a recent note, Morgan Stanley is naming Alibaba its “top pick” in the Chinese technology sector for the initial time in three years.