Alibaba reports disappointing quarterly growth and full-year revenue expectations amidst regulatory crackdown and more cautious consumer spending
Alibaba has cited increased regulation and a slowdown in consumer spending for disappointing annual revenue expectations.
The company said sales for its current fiscal year should rise 20 to 23 percent year-on-year, their slowest rate of growth since Alibaba’s market debut in 2014. Analysts had predicted growth of nearly 28 percent.
The figures follow a week after Alibaba said its annual Singles Day event grew at the slowest rate since its launch in 2009, for the first time failing to reach double-digit growth.
The 11-day event was 8.5 percent up on last year, however, and still hit a record high of 540.3 billion yuan (£63bn).
Sales grew 29 percent year-on-year for the quarter ended in September to 200.7bn yuan, the slowest rate of growth for a year and a half.
Alibaba chief executive Daniel Zhang told investors increasing competition, slowing consumption in China and a tighter regulatory environment were responsible for the figures.
The company cited a “regulatory environment that affect Alibaba’s business operations” and “privacy and data protection regulations and concerns” as two of its current challenges.
In April regulators handed Alibaba a record $2.8bn (£2bn) fine after finding it had broken competition law. Meituan, Tencent, Pinduoduo and other large tech firms have also been investigated or fined over anti-competitive behaviour.
Last November Chinese regulators cancelled a planned IPO for Alibaba’s Ant Group affiliate, which owns payment app giant Alipay. Other targets of the regulatory crackdown include Bitcoin mining, finance, gaming, entertainment and private education.
Alibaba’s cloud business continued to show strong growth, however, with revenues rising 33 percent year-on-year.
“Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalisation and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future,” Zhang said in a statement.
During a conference call with investors he said “economic headwinds, coupled by intensifying market competition” had affected the core China commerce business.
He said apparel and general merchandise showed a slowdown, but consumer electronics and furniture demand remained strong.
Alibaba’s shares have fallen 40 percent in value so far this year.