Alibaba’s quarterly report disappointed expectations, highlighting how China’s economic uncertainty and tight regulations on tech giants are leaving their mark.
Alibaba missed its revenue and earnings expectations for the September quarter, with slowing economic growth in China and tight regulation weighing on results.
Shares of the e-commerce giant listed in the United States fell more than 5% in pre-market trading on November 18.
The uncertain climate and pressure that reigns in China is weighing on Alibaba’s financial results: the dragon economy slowed down in the third quarter of the year, which also affected consumption.
Additionally, the online sales giant has come under China squeeze on the domestic technology industry, which has seen a slew of new antitrust and data protection regulations.
Alibaba misses expectations: all the data of the Chinese giant
In its fiscal second quarter, compared to Refinitiv’s consensus estimates, Alibaba reported:
- * revenue: 200.69 billion yuan ($ 31.4 billion) versus an estimated 204.93 billion yuan, an increase of 29% year-on-year;
- * Earnings per share: 11.20 yuan versus an estimated 12.36 yuan, a 38% decline year-on-year;
- * net profit: -81% to 5.4 billion yuan
The company has cut its revenue forecast for the current year. Previously, growth of 930 billion yuan was estimated, which would be about 29.5% year-on-year. However, the behemoth now expects growth between 20% and 23% annually.
Customer management revenue, the largest portion of Alibaba’s sales, increased by only 3%. The giant said this is due to slow growth in sales on its platform "which is the result of slowing market conditions and more players in the Chinese e-commerce market".
Alibaba has faced intense competition from its rival JD.com, but also from new players like Pinduoduo and even from social media companies like ByteDance, owner of TikTok.
Pinduoduo, for example, overtook Alibaba as China’s largest e-commerce platform for annual active shoppers this year, reaching 849.9 million users in the 12 months to June.
Meanwhile, JD.com has attracted new and returning brands such as Starbucks and Estee Lauder to its platforms, leveraging the Beijing rule to end exclusivity deals previously imposed on merchants.
Alibaba’s slowdown looked set to extend into a December period that included Singles’ Day, the biggest festival shopping of the year. Alibaba last week posted $ 84.5 billion in sales during the event, hitting another record high.
But the 8.5% increase was down sharply from previous years as the company avoided high-profile promotions and focused on sustainability.
