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This Is the Single Most Meaningless Shopping Event

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(Bloomberg Opinion) -- The World’s Largest Single-Day Shopping Festival has come and gone. And more records have been set.

They’re meaningless. 

Savvy investors would do well not to get caught up in the fluff and hype of Singles Day, Alibaba Group Holding Ltd.’s annual extravaganza. 

The figure that grabs all the headlines is gross merchandise value. This is often written as sales, which is somewhat confusing, if not misleading. Some use the term merchandise sales, a nice middle ground. 

Two years ago we argued that GMV is the world’s most useless financial metric. That was an assessment based not on gut feeling but an examination of the correlation between GMV and revenue: There wasn’t one.

Jack Ma seemed to agree, months later admitting that it’s not representative of the company or its business.

That hasn’t stopped Alibaba, and numerous media outlets, from shouting that figure from the rooftops each Nov. 11.

They should stop. While Singles Day GMV has climbed exponentially since its first incarnation in 2009, revenue and profit haven’t kept pace.

Let’s take a look at the numbers. First starting with GMV itself:

It’s truly an impressive feat to pump 213.5 billion yuan ($30.7 billion) through the cash registers in 24 hours. Of course, I suspect that a lot of those numbers were stacked up ready to go when the opening bell sounded. 

Then there’s the long-term growth trend at Alibaba, which is also a sight to behold:

Comparing to 2010, the first year Alibaba posted net profit after listing in New York, GMV for Singles Day climbed 179 times. Wow! Revenue, however, climbed a mere 21 times though net income did better at 54 times.

I put this all together, and because the numbers are so huge, I charted the logarithm of the growth.

You can see there’s a clear disconnect between Singles Day GMV and annual revenue or profit at Alibaba, and the gap is widening.

This matters because China’s economy is slowing. Alibaba and its peers, including Baidu Inc. and International Ltd., are starting to feel the pinch. This past weekend Alibaba vice chairman Joe Tsai noted that big-ticket items like TVs and refrigerators have been hit by that slowdown.

Yet if people keep getting caught up in the hype of yet another 24-hour shopping cycle, they’re liable to miss the bigger picture.

In fact, I predict that in the future Alibaba will stop publishing Singles Day GMV altogether. At some point that figure will drop, which would kill the festive mood. Instead the company will follow in Apple Inc.’s footsteps (they will stop publishing iPhone shipments) by getting ahead of the bad news.

That’s not to say the fun can’t continue.

After all, you don’t need big fancy numbers when you can lure Mariah Carey, Miranda Kerr, Daniel Craig, Scarlett Johansson and Kobe Bryant to your party.

To contact the editor responsible for this story: Rachel Rosenthal at

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.

©2018 Bloomberg L.P.

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