Alibaba Holding Group (BABA) posted fourth quarter earnings that fell short of some market forecasts Thursday but boosted its 2018 revenue guidance as it unveiled plans take a major stake in Ant Financial Services Group Ltd., a payment affiliate that was recently blocked from buying U.S.-based MoneyGram International Inc. (MGI)

Alibaba said sales for the three months ending in December rose 56% from the same period last year to 83.028 billion yuan ($12.761 billion), topping analysts' forecast of around $12 billion. Earnings per share, however, on a non-GAAP basis, were $1.63, the company said, a figure that missed some Wall Street estimates of $1.67 per share but were impacted by the yuan's rapid rise against the dollar since the end of the quarter. The group also said it sees 2018 sales growth of between 55% and 56%, thanks in part to a surge 27 million in China-based users on its retail website and "clear visibility"on its expansion plans. Alibaba also said its sales and marketing costs surged 90.2% to 8.5 billion yuan.

"Alibaba had another great quarter driven by the continued strength of the Chinese consumer and the wide and innovative range of services we provide for merchants and consumers," said CE Daniel Zhang. "We are excited by the continued momentum in New Retail, which came to life during another record-breaking 11.11 Global Shopping Festival. We expanded the scale and footprint of our New Retail initiatives with the vision of delivering true convergence of the online and offline consumer experience through mobile and enterprise technology."

Alibaba shares fell 5.19% in the opening minutes of trading Thursday to change hands at $193.70 each, the lowest since Jan. 23, a move that trimmed their six-month gain to around 24% and took the group's market cap to around $500 billion. 

Alibaba founder Jack Ma.
Alibaba founder Jack Ma.

Alibaba, which was co-founded by billionaire Jack Ma, Asia's richest man, had 515 million monthly active users on its mobile platform at the end of September, the company said, up 27 million from the three month period that ended in December of last year but down from the previous quarter. The group's mobile monthly active users in China increased by 31 million to 580 million, the company said.

Zhang said the Ant Financial stake, which is expected to be around 33%, is a "a significant step for Alibaba to enhance our long-term strategic relationship" with the payment affiliate, in exchange for intellectual property rights. 

"Importantly, an equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector, as well as the benefits of user growth and improved customer experience," he said.

Earlier this year, MoneyGram Ant Financial called off their proposed $1.2 billion merger after the deal failed to get approval from the U.S. Committee on Foreign Investment in the United States (Cfius), which rejected the pair's efforts to address concerns about how the two groups would share data.

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