Alibaba Pushed to First Operating Loss Since Going Public Due to China Anti-Monopoly Fine

China's top e-commerce platform Alibaba Group on Thursday posted its first quarterly operating loss since going public in 2014 due to a record anti-monopoly fine by the country's market regulator.

Its US-listed shares fell nearly 3 percent in choppy trading, even as the company forecast strong 2022 revenue, betting that the pandemic-driven shift to online shopping will remain resilient.

The outlook, however, was overshadowed by a regulatory crackdown in China that led to the suspension of a $37 billion (roughly Rs. 2,77,000 crores) IPO of its affiliate Ant Group and a $2.8 billion (roughly Rs. 20,540 crores) fine in April for anti-competitive business practices.

The fine led to a CNY 7.66 billion (roughly Rs. 8,720 crores) operating loss in the fourth quarter ended March 31.

"The Penalty Decision motivated us to reflect on the relationship between a platform economy and society, as well as our social responsibilities and commitments," Chief Executive Daniel Zhang said in an earnings call.

Alibaba forecast annual revenue of CNY 930 billion (roughly Rs. 10,59,000 crores) for the year ending March 2022, above expectation of CNY 928.25 billion (roughly Rs. 10,57,000 crores).

Core commerce revenue rose 72 percent to CNY 161.37 billion (roughly Rs. 1,83,800 crores) in the fourth quarter. But growth at its cloud computing unit slowed to 37 percent to CNY 16.8 billion (roughly Rs. 19,140 crores) from 58 percent a year earlier, its weakest since at least 2016.

Alibaba said it was due to a top customer with a "sizeable presence outside of China" ending its business for "non-product related reasons."

Overall revenue rose to CNY 187.4 billion (roughly Rs. 2,13,420 crores) in the fourth quarter, topping a Refinitiv forecast of CNY 180.41 billion (roughly Rs. 2,05,500 crores).

Alibaba's US listed shares have fallen more than 30 percent since hitting a record high in late October when its founder Jack Ma delivered a speech in Shanghai criticising China's financial regulators.

The sinking share price reflects investor anxiety over regulation, said Brock Silvers, chief investment officer at Hong Kong-based Adamas Asset Management.

"The company has faced rogue waves of regulatory risk, which now threaten the entire tech sector."

© Thomson Reuters 2021