Despite the loss, China’s leading e-commerce platform forecast revenue for 2022 above market targets, betting that the pandemic-driven shift in online shopping will remain resilient.
China’s leading e-commerce platform, Alibaba Group Holding Ltd, recorded its first quarterly operating loss since it went public in 2014 due to a record antitrust fine by the country’s market regulator.
Its U.S.-listed shares fell nearly 3 percent in hectic trade, though the company forecast strong revenue for 2022, betting that the online shopping shift driven by a coronavirus pandemic will remain resilient. .
The outlook, however, was overshadowed by regulatory repression in China that led to the suspension of a $ 37 billion initial public offering from its subsidiary Ant Group and a $ 2.8 billion fine in April for anti-competitive business practices.
The fine caused an operating loss of 7.666 billion yuan ($ 1.191 billion) in the fourth quarter ended March 31.
“The sentencing decision motivated us to reflect on the relationship between a platform economy and society, as well as on our social responsibilities and commitments,” chief executive Daniel Zhang said in a call for benefits.
Alibaba forecast annual revenue of 930 billion yuan ($ 144.122 billion) for the year ending March 2022, above expectations of 928.25 billion yuan.
Basic trade revenues rose 72% to 161.37 billion yuan ($ 25 billion) in the fourth quarter. But growth in its cloud computing unit slowed to 37 percent to 16.8 billion yuan ($ 2.601 billion) from 58 percent a year earlier, the weakest since at least 2016.
Alibaba said it was due to a customer with a “considerable presence outside of China” ending its business for “non-product-related reasons.”
General revenue rose to 187.4 billion yuan ($ 29.03 million) in the fourth quarter, surpassing a Refinitiv forecast of 180.41 million yuan ($ 27.95 billion).
Alibaba’s U.S.-listed shares have fallen more than 30 percent since reaching record highs in late October, when founder Jack Ma delivered a speech in Shanghai criticizing China’s financial regulators .
Brock Silvers, investment director at Hong Kong-based Adamas Asset Management, said the declining stock price reflects investors’ anxiety about regulation.
“The company has faced changing waves of regulatory risk, which now threaten the entire technology sector.”