With several warnings of slower growth in shares, the tech giant Alibaba has warned of weaker growth as china economy slows while Beijing continues its regulatory crackdown.
Alibaba (its listing in the city in November 2019. The fall in Hong Kong followed a similar plunge Thursday in its share price on Wall Street after the company reported disappointing quarterly earnings and warned that results for the year will miss analysts’ estimates.) dropped 10.7%, the steepest decline since
So far this year, Alibaba’s stock has dropped 40%, wiping about $234 billion from the value of the company. Friday’s plunge dragged down Hong Kong’s benchmark Hang Seng Index (), which fell 1.1%.
Alibaba’s sales grew 29% last quarter from a year ago, to $31.1 billion. Wall Street was expecting revenue of $32.1 billion. Earnings per share fell 38% from a year ago and were below expectations. The company said that sales for its current fiscal year should rise between 20% and 23% from a year ago. Analysts were predicting growth of nearly 28%.
Alibaba and fellow Chinese tech giants Tencent (), Baidu ( ) and TikTok owner ByteDance have been subject to increased regulatory scrutiny from the Chinese government in the past year.
Last November, Beijing yanked the IPO for Alibaba’s Ant Group affiliate, which owns payment app giant Alipay. In the year that followed, the Chinese government’s regulatory might has changed industries ranging from tech and finance to gaming, entertainment and private education.
In April, regulators slapped a record $2.8 billion fine on Alibaba, accusing it of behaving like a monopoly. Meituan, Tencent, Pinduoduo ( ), and other tech firms have also been investigated or fined over alleged anti-competitive behavior.
In its earnings release on Thursday, Alibaba citeda “regulatory environment that affect Alibaba’s business operations” and “privacy and data protection regulations and concerns” as some of the uncertainties it was facing
Alibaba’s giant cloud business continues to post impressive results though. Revenue rose 33% from a year ago for that unit. Alibaba Cloud has helped the company expand beyond China as well.
“Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization, and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future,” Alibaba chairman and CEO Daniel Zhang said in a statement.
“Amid an unprecedented year following tightened regulation, without much flexibility, [Alibaba] will need to navigate through the multiple headwinds while continuing to invest in technology innovation, globalization and expand its domestic consumer reach,” Citi analysts said in a research report on Friday.