China’s top e-commerce platform Alibaba Group Holding Ltd on May 13 posted its first quarterly operating loss since going public in 2014 due to a record anti-monopoly fine by the country’s market regulator. Its US-listed shares fell nearly 3 percent in choppy trading, even as the company forecast strong 2022 revenue, betting that the pandemic-driven shift to online shopping will remain resilient.
The outlook, however, was overshadowed by a regulatory crackdown in China that led to the suspension of a $37-billion IPO of its affiliate Ant Group and a $2.8-billion fine in April for anti-competitive business practices. The fine led to a 7.66-billion yuan ($1.19 billion) operating loss in the fourth quarter ended March 31.
“The penalty decision motivated us to reflect on the relationship between a platform economy and society, as well as our social responsibilities and commitments,” Chief Executive Daniel Zhang said in an earnings call. Alibaba forecast annual revenue of 930 billion yuan ($144.12 billion) for the year ending March 2022, above the expectation of 928.25 billion yuan.
Core commerce revenue rose 72% to 161.37 billion yuan in the fourth quarter. But growth at its cloud computing unit slowed to 37% to 16.8 billion yuan from 58% a year earlier, its weakest since at least 2016. Alibaba said it was due to a top customer with a “sizeable presence outside of China” ending its business for “non-product related reasons.”
Overall revenue rose to 187.4 billion yuan in the fourth quarter, topping a Refinitiv forecast of 180.41 billion yuan. Alibaba’s US-listed shares have fallen more than 30% since hitting a record high in late October when its founder Jack Ma delivered a speech in Shanghai criticizing China’s financial regulators.
The sinking share price reflects investor anxiety over-regulation, said Brock Silvers, chief investment officer at Hong Kong-based Adamas Asset Management. “The company has faced rogue waves of regulatory risk, which now threaten the entire tech sector.”