Alibaba warns of slowing growth after missing Wall Street earnings estimates

Actions of Ali Baba (BABA) were down 10% at the start of Thursday’s session. The Chinese e-commerce giant announced sales growth of 29% from a year ago, to $ 31.1 billion. But Wall Street expected sales of $ 32.1 billion. Earnings per share fell 38% from a year ago and was also below expectations.

The company also said sales for its current fiscal year are expected to increase 20-23% from a year ago. Analysts were forecasting growth of nearly 28%.

In its release of the results, Alibaba cited “regulations” and a “regulatory environment that affects Alibaba’s business operations” as well as “privacy and data protection regulations and concerns” as some of the uncertainties it faces. was facing.

Earlier this year, Alibaba was forced to cancel plans to list its subsidiary Ant Group, which owns fintech giant Alipay, on the stock market.

However, Alibaba’s giant cloud business continues to show impressive results. Revenue increased 33% from a year ago for this unit. Alibaba Cloud has also helped the company grow beyond China, a key focus.

“Alibaba has continued to invest strongly in our three strategic pillars of domestic consumption, globalization and cloud computing to lay a solid foundation for our long-term goal of sustainable growth going forward,” said Daniel Zhang, Chairman and CEO of Alibaba.

Alibaba’s results come a week after the company wrapped up its annual Singles Day online shopping extravaganza. Chinese consumers continued to do well during the event, but the platform’s sales growth was slower than last year.

This is probably due in part to the regulatory environment, but Alibaba is also facing stiffer competition as well as a slowing Chinese economy.

In a conference call with analysts Thursday, Zhang said that “economic headwinds, coupled with intensifying competition in the market, have also affected our core business operations in China.”

He noted that there was a slowdown in clothing and general merchandise, but demand for consumer electronics and furniture remained resilient.

Rival JD.com (JD) also reported gains Thursday morning. Both sales and profits beat expectations, and the company’s shares rose nearly 4% early in the session.

“Consumers and business partners increasingly trust JD, and we were able to outperform the industry’s growth in China in the third quarter,” Lei Xu, president of JD.com, said in the earnings release.

JD.com shares have jumped more than 25% in the past six months while Alibaba shares have fallen almost 25% in the same period.


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