Chinese e-commerce giant Alibaba Group Holding Ltd posted its slowest quarterly revenue growth since going public in 2014, as China’s Covid-19 restrictions and an economic slowdown added to the financial toll of a regulatory crackdown.
For the quarter ended March, the Hangzhou-based company’s revenue rose 9% from the same period a year ago to 204.1 billion yuan, or $32.2 billion, at an exchange rate of 6.34 yuan for the dollar used by Alibaba. was based on. It reported a net loss of 16.2 billion yuan in the fourth quarter of the fiscal year, compared to a net loss of 5.5 billion yuan a year ago. Alibaba cited falling prices in its equity investments in publicly traded companies.
For the fiscal year that ended in March, Alibaba posted revenue of 853.1 billion yuan, up 19% from a year earlier. Unlike recent years, it did not give a forecast for the current fiscal year, which ends in March 2023.
“Since mid-March 2022, our domestic businesses have been significantly affected by the COVID-19 resurgence in China, particularly in Shanghai,” Alibaba said. “Given the risks and uncertainties arising from COVID-19, which we have not been able to control. and are difficult for us to predict, we believe it is prudent not to provide financial guidance at this time.”
Growth has slowed significantly at China’s biggest tech companies as the industry grapples with mounting domestic economic headwinds on top of a regulatory crackdown that began in late 2020. Last week, Tencent Holdings Ltd., a videogame and social-media giant, said in January-March quarter revenue was essentially flat. Search-engine giant Baidu Inc. on Thursday reported a 1% increase in its first-quarter revenue compared to a year ago.
Some of Alibaba’s US peers have also experienced slow growth. Amazon.com Inc.’s January-March revenue grew nearly 7%, the slowest pace in nearly two decades due to a slowdown in online shopping, higher costs from inflation and a supply-chain crisis. Google parent Alphabet Inc’s sales grew 23%, the lowest rate for the company since 2020, as digital ad spending was disrupted by global economic turmoil.
In China, the impact of COVID-19 restrictions – including a lockdown on industrial hubs such as Shanghai – has hit the economy, disrupting supply chains and logistics as well as slashing consumption. China’s April retail sales, a proxy for consumption, were down 11% from a year ago, the second-straight monthly decline and the biggest contraction since March 2020.
Alibaba has also been affected by Chinese regulatory actions. In late 2020, Chinese authorities forced Alibaba’s financial-technology affiliate Ant Group Co to halt its initial public offering. Last April, Alibaba was slapped with a record antitrust fine of $2.8 billion. Its billionaire founder Jack Ma has largely retreated from the public eye.
As China’s economic outlook rapidly deteriorates, Beijing has signaled a pause in its regulatory campaign aimed at the tech giant. Last week, senior Chinese politicians spoke of support for a stronger digital economy in a meeting with some tech executives.
Over the years, ByteDance Ltd., Meituan and Pinduoduo Inc. Companies like Alibaba have eaten away at Alibaba’s market share in its core domestic e-commerce business. As a response, Alibaba invested heavily in Taobao Deals, a bargaining platform, and Taocaicai, a marketplace that delivers daily necessities and groceries to local neighborhoods.
Alibaba’s American depository receipts have fallen nearly 60% over the past year. Alibaba’s stock rose 5 per cent in premarket trading on Thursday after the results were released.
Ant reported an estimated net profit of 22 billion yuan for the quarter ended December 31, up slightly from the same period a year ago, according to Wall Street Journal calculations based on Alibaba’s earnings disclosure. Alibaba owns a third of Ant and reports the online payments giant’s share of a quarter of profits in arrears.
This story has been published without modification to the text from a wire agency feed