China’s Alibaba Group Holding Ltd. forecast annual revenue to grow at its slowest pace since its 2014 stock market debut as second-quarter results missed expectations due to slowing consumption, increasing competition, and a regulatory clampdown.
U.S.-listed shares of Alibaba, which expects its fiscal year 2022 revenue to grow by 20 percent to 23 percent, were down 3 percent before the opening bell on Thursday.
The company last week recorded its slowest sales growth during its annual Singles’ Day, the world’s biggest online shopping fest.
Once a major media event, the company downplayed its sales tallies and instead highlighted its efforts to improve social welfare and the environment.
China’s big tech companies have also been under pressure as the country’s regulators clampdown on powerful players from Alibaba to ride-hailing company Didi Global Inc., citing antimonopoly and security reasons.
The clampdowns have also hurt Chinese gaming and social media company Tencent Holdings, which posted its slowest quarterly revenue growth since it went public in 2004.
Alibaba’s founder Jack Ma has been largely out of public view since criticizing the Chinese regime’s regulatory system last year.
Authorities forced the suspension of the $37 billion initial public offering of Alibaba’s fintech affiliate Ant Group last November, and imposed a record $2.8 billion fine on Alibaba for anti-competitive business practices in April.
The company logged its first operating loss as a public company the same quarter it faced the penalty, and has lost about a third of its market value so far this year.
For the reported quarter, the e-commerce juggernaut’s revenue growth rose 29 percent to $31.44 billion, its slowest rate of growth in six quarters. Analysts on average had expected revenue of $32.10 billion, according to Refinitiv data.
Adjusted net income hit $4.5 billion, down 39 percent year-on-year. The company said earlier this year it intends to invest heavily in areas such as Taobao Deals, an e-commerce service targeting lower-tier cities, and offline retail initiatives.
Revenue at Alibaba’s China commerce retail business, its main e-commerce unit, hit $19.9 billion, a 33 percent year-on-year increase.
Revenue from cloud computing reached $3.1 billion, also up a third year-on-year.
On an adjusted basis, it earned $1.75 per share, below estimates of $1.94.
Ant Group recorded a quarterly profit of about $3.1 billion for the quarter ended June. Alibaba records its profit from Ant one quarter in arrears.
By Subrat Patnaik and Josh Horwitz