Alibaba posts first operating loss as public company

Shanghai — China’s top e-commerce platform Alibaba Group on Thursday 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% 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 $37bn IPO of affiliate Ant Group and a $2.8bn fine in April for anticompetitive business practices.

The fine led to a 7.66-billion yuan ($1.19bn) 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,” CEO Daniel Zhang said in an earnings call.

Alibaba forecast annual revenue of 930-billion yuan ($144.12bn) for the year ending March 2022, above 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 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 criticising 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.”

Reuters