Alibaba’s First Quarterly Loss Since Going Public Has Been Reported

Alibaba Group Holding Ltd, China’s largest e-commerce platform, recorded its first quarterly net loss since going public in 2014, owing to a historic anti-monopoly fine imposed by the country’s market regulator.

Even as the group predicted high 2022 sales, its US-listed shares dropped nearly 3% in choppy trade, betting that the coronavirus pandemic-driven transition to online shopping would remain resilient.

A regulatory crackdown in China, however, cast a pall over the future, leading to the cancellation of Ant Group’s $37 billion initial public offerings and a $2.8 billion fine in April for anti-competitive trading practices.

The fine resulted in an operating loss of 7.66 billion yuan ($1.19 billion) in the fourth quarter ended March 31.

In an earnings call, Chief Executive Daniel Zhang said, “The Penalty Decision inspired us to focus on the relationship between a network economy and society, as well as our social obligations and commitments.”

Alibaba expects annual sales of 930 billion yuan ($144.12 billion) for the fiscal year ending March 2022, up from 928.25 billion yuan previously expected.

In the fourth quarter, core commerce sales increased by 72 percent to 161.37 billion yuan ($25 billion). However, growth at its cloud infrastructure unit slowed to 37 percent from 58 percent a year ago, to 16.8 billion yuan ($2.60 billion), the slowest since at least 2016.

It was attributed to a top client with a “significant footprint outside of China” ceasing operations for “non-product specific purposes,” according to Alibaba.

In the fourth quarter, total sales increased to 187.4 billion yuan ($29.03 billion), above the Refinitiv estimate of 180.41 billion yuan ($27.95 billion).

Alibaba’s stock has dropped more than 30% after reaching a new peak in late October when founder Jack Ma gave a speech in Shanghai criticizing China’s financial regulators.

According to Brock Silvers, chief investment officer at Hong Kong-based Adamas Asset Management, the falling stock price reflects market concerns about the legislation.

“The firm has been hit by a slew of regulatory risks that now concern the whole tech sector.”

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