Chinese e-commerce giant Alibaba Group Holding Ltd. slashed its forecast for annual revenue growth on increased competition and a regulatory clampdown, sending its stock tumbling 11 percent.
Alibaba now expects revenue for the year ending in March to rise between 20 and 23 percent, the slowest pace since its 2014 stock market debut and down from a May forecast of 29.5 percent growth. The company also undershot expectations for earnings per share in the second quarter.
Chinese shoppers have become more cautious about spending amid COVID-19 outbreaks and that, combined with supply disruptions, contributed to slower growth for China’s economy in the quarter.
“These economic headwinds, coupled by intensifying market competition also affected our core commerce business in China,” Alibaba CEO Daniel Zhang said on an earnings call, adding that demand for apparel and general merchandise had been particularly affected.
But analysts also noted that while Alibaba had been hit by slower-than-expected growth in demand for fashion and accessories, its rivals had done much better in apparel sales.
At the same time, big e-commerce companies in China are having to contend with the expansion into e-commerce from the likes of short video apps Kuaishou and ByteDance’s Douyin, which are now benefiting from unprecedented regulatory efforts to ensure there is more competition in the marketplace.
“We see intensified competition further eating into Alibaba’s market share and widening the difference in revenue growth of Alibaba vs. peers,” Daiwa Capital Markets analysts said in a research note.
JD.com Inc. also reported quarterly results on Thursday but exceeded market expectations, sending its shares up 6 percent.
For the quarter ended Sept. 30, Alibaba earned $1.75 dollar per share on an adjusted basis, missing an average estimate of $1.93.
Revenue climbed 29 percent, the smallest rise in six quarters, to $31.4 billion, which was just under a Refintiv consensus estimate.
Alibaba said it had recorded single-digit growth for physical goods gross merchandise value, a key online retailing metric for the total value of merchandise sold through a marketplace, though it did not provide more details or a comparison with previous quarters.
Including Thursday’s losses, Alibaba’s stock has lost a huge 38 percent so far this year, valuing the company at about $390 billion. Its shares in Hong Kong were down 10.6 percent on Friday.
Alibaba’s fintech affiliate Ant Group recorded a quarterly profit of about $3 billion for the quarter ended June, up 39 percent. Alibaba records its profit from Ant Group one quarter in arrears.
By Josh Horwitz and Subrat Patnaik