China’s largest e-commerce platform Alibaba Group (Alibaba Group) on Thursday released its first quarterly operating loss since its listing in 2014, due to record antitrust fines imposed by the country’s market regulators.
The company’s US-listed shares fell nearly 3% in shock trading, although the company predicts strong revenue growth in 2022 and is betting that the pandemic-driven shift to online shopping will remain resilient.
However, due to the severe crackdown by the Chinese regulatory authorities, the prospect was cast a shadow, which led to the suspension of the US$37 billion (approximately 277 billion rupees) IPO of its subsidiary, Ant Group, and a fine of 2.8 billion in 2008. US dollars (approximately Rs 2,054 billion). Anti-competitive business practices were announced in April.
The fine resulted in an operating loss of RMB 7.66 billion (approximately Rs 8,720 crore) for the fourth quarter ended March 31.
Chief Executive Daniel Zhang (Daniel Zhang) said on a earnings conference call: “The penalty decision prompts us to reflect on the relationship between the platform economy and society, as well as our social responsibilities and commitments.”
Alibaba estimates that its annual revenue as of March 2022 will be 930 billion yuan (approximately Rs 105.9 trillion), higher than the expected 928.25 billion yuan (approximately Rs 105.7 trillion).
In the fourth quarter, core business revenue increased by 72% to RMB 161.37 billion (approximately Rs 1,838 billion). But the growth of its cloud computing division fell from 58% a year ago to 37% to 16.8 billion yuan (approximately 191.14 billion rupees), which is the lowest level since 2016.
Alibaba said this was due to a top customer who “has a considerable scale of business outside of China” terminated the business for “non-product related reasons.”
Total revenue in the fourth quarter increased to RMB 187.4 billion (approximately Rs 2,134,4.2 billion), exceeding the RMB 180.41 billion (approximately Rs. 2,055 billion) predicted by Refinitiv.
Alibaba’s US-listed shares have fallen by more than 30% since they hit a record high at the end of October, when its founder Jack Ma delivered a speech in Shanghai criticizing China’s financial regulators.
Brock Silvers, chief investment officer of Adamas Asset Management in Hong Kong, said the drop in stock prices reflects investor concerns about regulation.
“The company is facing a wandering of regulatory risks and is now threatening the entire technology sector.”
Thomson Reuters 2021 ©