Is Alibaba Growing or Shrinking? A Deep Dive

I've been following Alibaba since its early days, long before the IPO. And honestly, the question of whether it's growing or shrinking isn't as straightforward as a single number. Look at the headlines: one day you see revenue up 11% quarter over quarter, the next you see its stock halved. So let's cut through the noise.

In this article, I'm going to walk you through the real metrics—not the ones the PR team cherry-picks—and give you my honest take based on years of tracking this company. I'll cover revenue trends, profit quality, segment-by-segment performance, and the competitive threats that keep me up at night.

The Numbers Game: Revenue vs. Profit

The most recent quarterly report shows Alibaba's revenue growing about 9% year-over-year. Not bad for a company of its size, right? But dig deeper, and the story gets complicated. Adjusted EBITA (earnings before interest, taxes, and amortization) actually declined by 5% in that same quarter. That's the first red flag: they're making more money but keeping less of it.

Take a look at the comparison over the last 12 months:

That net income drop is scary—44% down—but it's partly due to one-time impairments and mark-to-market losses on equity investments. The operating business is more stable, but the profit erosion is real.

Core Commerce: Taobao and Tmall Fighting for Market Share

I've been using Taobao since 2012, and the platform feels different now. It's crowded, flashy, and somehow less intuitive. The data backs that up: Alibaba's share of China's e-commerce market has slipped from around 70% in 2018 to about 60% today. The biggest culprits? Pinduoduo and Douyin (TikTok's sister app).

The rise of Pinduoduo and Douyin

Pinduoduo's group-buying model and ultra-low prices have eaten into Alibaba's lower-end consumer base. Meanwhile, Douyin's live-streaming e-commerce has stolen the attention of younger shoppers. I personally bought three items on Douyin last month—something I'd never have done two years ago. The user experience is addictive, and Alibaba hasn't cracked that code yet.

Alibaba's user growth in China has stagnated. Monthly active users (MAUs) on the Taobao and Tmall apps are hovering around 900 million, barely up from last year. That's a mature market, but the worry is that users are spending more time on rival apps.

Cloud Computing: A Bright Spot?

Alibaba Cloud is often pitched as the next growth engine. And it's true: cloud revenue grew 23% year-over-year in the last quarter, making it the fastest-growing major segment. But there's a catch: it's still not very profitable. The cloud business only turned profitable on an adjusted EBITA basis a few quarters ago, and the margin is razor-thin (around 1-2%).

I visited the Alibaba Cloud headquarters in Hangzhou last year, and the energy was impressive. But talking to engineers, I learned that they're losing deals to Huawei Cloud and Tencent Cloud in China, and to AWS and Azure globally. The competition is brutal.

Alibaba is still the market leader, but its lead is shrinking fast. Huawei is especially aggressive in government and enterprise contracts.

International Expansion: The New Growth Engine

This is where I see the most potential—and the most risk. Alibaba's international commerce (Lazada, AliExpress, Trendyol, Daraz) grew 44% year-over-year in the last quarter. That's impressive. But the business is burning cash. International commerce reported an adjusted EBITA loss of $1.2 billion last year.

I've used Lazada in Southeast Asia, and it's not as seamless as Shopee. The logistics are improving, but delivery times are still inconsistent. Alibaba's cross-border logistics arm, Cainiao, is a key differentiator, but it's also capital-intensive.

If Alibaba can achieve scale in emerging markets, international could become a huge profit center. But right now, it's a cash incinerator.

What About the Ant Group Overhang?

No analysis of Alibaba is complete without mentioning Ant Group. Alibaba owns a 33% stake in Ant, but the regulatory crackdown in 2020 changed everything. Ant's valuation has been slashed from $300 billion to maybe $100 billion. Alibaba's stake is now worth around $33 billion on paper, but it's illiquid and faces ongoing regulatory uncertainty.

Ant's IPO, once the world's largest, is now a distant memory. The fintech giant is being forced to restructure into a financial holding company, which means higher capital requirements and lower returns. This directly impacts Alibaba's book value and investor sentiment.

Is Alibaba Shrinking? The Bear Case

Let me play devil's advocate. The bear case says Alibaba is in secular decline. Here are the key points:

• Market cap collapse: From a peak of $850 billion to around $200 billion today. That's a 75% drop—worse than many bankrupt companies.
• Talent exodus: I've personally seen top engineers leave for ByteDance and Meituan. The founder Jack Ma is no longer involved, and the corporate culture has become more bureaucratic.
• Regulatory headwinds: The anti-monopoly campaign is not over. Alibaba was fined $2.8 billion in 2021, and more regulations could come.
• Innovation deficit: Alibaba hasn't launched a major new product in years. DingTalk is decent, but it's no WeChat. The virtual reality and AI initiatives feel half-hearted.

If you believe the bear case, Alibaba is shrinking not just in stock price but in its core competitive advantages. The once-unassailable moat is eroding.

Is Alibaba Growing? The Bull Case

On the flip side, the bulls have strong arguments too:

• Cash machine: Alibaba has $60 billion in net cash (cash minus debt). It can buy back shares aggressively—and it is. The buyback program of $25 billion is one of the largest in history.
• Diversified portfolio: Cloud, international, logistics, entertainment, and local services give multiple growth vectors.
• Undervalued assets: Alibaba's stake in Ant, Cainiao, and other investments are worth at least $100 billion combined. The current market cap of $200 billion means the core e-commerce business is priced at only $100 billion—just 8 times earnings.
• AI potential: Alibaba has invested heavily in AI, including its Tongyi Qianwen model. If AI drives efficiency in e-commerce and cloud, margins could expand dramatically.

I lean slightly towards the bull case, but with caution. The company is not shrinking in absolute terms—revenue and users are still growing. But relative to its past glory and its peers, it's underperforming.

My Take After Following Alibaba for Over a Decade

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Article fact-checked against Alibaba's latest quarterly earnings release and third-party market share reports. Personal observations based on visits and industry conversations.