Alibaba narrows sales outlook as competition bites as demand slows Reuters

Josh Horwitz and Subrat Patnaik

(Reuters) -China e-commerce giant Alibaba (NYSE 🙂 Group Holding Ltd reduced its forecast for annual revenue growth due to increased competition and regulatory repression, reducing its shares by 11%.

Alibaba now expects annual revenues to end in March to rise by between 20% and 23%, the slowest pace since its IPO in 2014 and below the forecast of 29.5% growth in May. The company also exceeded earnings expectations per share in the second quarter.

Chinese buyers have been more cautious about spending among the outbreaks of coronavirus, which, along with supply disruptions, has slowed the growth of the Chinese economy in the quarter.

“These economic downturns, along with increased market competition, have also affected our main trading business in China,” Alibaba CEO Daniel Zhang said in a profit call, adding that demand for clothing and general merchandise has been particularly affected.

But analysts also noted that while growth in demand for Alibaba fashion and accessories has been slower than expected, rivals have performed much better in clothing sales.

At the same time, large Chinese e-commerce companies are facing the expansion of e-commerce in the form of Kuaishou and ByteDance’s Douyin short video applications, and are now taking advantage of unprecedented regulatory efforts to ensure more competition. market.

“We see competition increasing as Alibaba’s market share increases and Alibaba’s revenue growth gap is widening,” Daiwa Capital Markets analysts said in a research note.

JD (NASDAQ 🙂 .com Inc. also reported quarterly results https://www.reuters.com/world/china/chinas-jdcom-reports-25-jump-quarterly-revenue-2021-11-18 on Thursday, but expectations exceeded the market, with its shares rising 6%.

In the quarter ended September 30, Alibaba earned 11.20 yuan on an adjusted basis per share, missing an average estimate of 12.36 yuan.

Revenue rose 29%, the lowest increase in six quarters, to 200.7 billion yuan ($ 31.4 billion), below Refintiv’s consensus estimates.

Alibaba said it recorded a single-digit increase in the gross value of physical goods, a key online retail measurement of the total value of goods sold through a market, although it did not provide more details or compare with previous quarters.

Including Thursday’s losses, Alibaba’s shares have lost a whopping 38% this year, and the company is valued at about $ 390 billion. Shares in Hong Kong fell 10.6% on Friday.

Alibaba’s fintech subsidiary Ant Group posted quarterly earnings of about 19.7 billion Yuan in the quarter ended June, up 39%. Alibaba records Ant’s gain delayed by a quarter.

($ 1 = 6.3838)