Alibaba shares decline despite strong earnings
Alibaba shares shed more than 4 percent on the Hong Kong Stock Exchange on Wednesday despite strong fourth-quarter earnings as uncertainty regarding regulatory environment lingers.
The business prospects and IPO plans of Alibaba's financial affiliate Ant Group — of which Jack Ma is the controller — is subject to substantial uncertainties.
"We are unable to make a complete and fair assessment of the impact that these changes and uncertainties will have on Alibaba Group," Chairman and CEO Daniel Zhang said.
Shares of Alibaba have declined 17 percent over the past three months. The company went through an eventful period following the abrupt suspension of Ant Group's massive IPO.
Ant Group is in the process of developing its ratification plan, and the e-commerce giant has set up a special task force to conduct internal reviews following an investigation notice by the State Administration for Market Regulation in late December.
It's now actively working with antitrust regulators to comply with their requirements.
Alibaba's sales for the December quarter posted stronger-than-expected 37 percent year-on-year growth totaling 221.1 billion yuan (US$34.2 billion) and adjusted earnings of 61 billion yuan, up 21 percent year on year.
The company has more than 900 million active monthly users in its China retail marketplace.
Alibaba Cloud posted positive adjusted earnings during the quarter thanks to economies of scale with quarterly revenue growing 50 percent year-on-year to 16.11 billion yuan.
Payments using Ant's non-collateral credit in Alibaba’s China marketplaces represent only a very small percentage of total credit granted under the platform, Zhang said.
The state-backed China Internet Network Information Center stated in its biannual research report that the country now has nearly 260 million web users above the age of 50, and more than 31 percent live in rural areas.
The online retail market size jumped 10.9 percent on an annual basis to 11.76 trillion yuan in 2020, and the sales of physical goods through digital sites make up 24 percent of total retail spending — 9.76 trillion yuan.
Responding to new rivals and shifting behaviors in China's Internet landscape, Alibaba incubated and increased investments in new seed businesses — including Taobao Deals, Taobao Live, Taoxianda, Taobao Short Video and Taobao Grocery — to address new consumption demand and behaviors.
Bank of Communications International expects Alibaba's revenue in the current quarter to add 61 percent to 184.2 billion yuan, due to the low base from a year earlier. It also estimate earnings to grow at a lower pace of 57 percent due to strategic investment ahead.