Alibaba spent a record breaking $41.6 billion on product development, sales and marketing, general administration and cost of revenue in 2018.This was a 86.2 percent increase from 2017 when the company splashed out 149.7 billion yuan on improving its products.This caused shares to soar with investors content with a record amount of spending by the company, hoping that it will spur future growth.
The Chinese e-commerce giant had to contend with a slowing Chinese economy and the ongoing U.S.-China trade war. One area the market was focused on is spending by the company with some analysts thinking that Alibaba could reign in expenditures because of the tougher operating environment.
Alibaba finance chief Maggie Wu said the profitability from the company’s core commerce business allowed it to generate the money to continue to invest.
She said,“This profitability and $7.5 billion in free cash flow generated this quarter enable us to continue to invest in other important strategic businesses and technology to support the growth of our ecosystem.”
While its core e-commerce business is currently the biggest source of revenue and profits, the company sees a more diversified business being stronger in the future. Other businesses such as cloud computing, which is growing rapidly, and digital entertainment have seen their share of revenue increase.