Alibaba’s shares drop as increasing government pressure sees it miss forecasts

Alibaba missed analyst expectations over the previous quarter as increasing competition from rivals and an ongoing government-led “rectification” campaign.

The ecommerce giant saw retail revenues jump by 35 per cent to 180.24 billion yuan (£19.99 billion) in the three months to June, failing to meet average estimates of 184 billion yuan (£20.43 billion).

Its total revenue, which includes its cloud computing business and customer management arm, also missed analyst estimates rising 34 per cent to 205.74 billion yuan (£22.84 billion).

Meanwhile net income also dropped five per cent to 45.14 billion yuan (£5 billion), painting a picture of slowing growth for Asia’s largest retailer.

The news has sent Alibaba’s shares dropping 1.4 per cent this morning, adding further pressure on the tech giant which has seen shares drop around 36 per cent over the last year.

READ MORE: Alibaba fined for hosting sexually suggestive content involving minors

It comes as the Chinese government pushes forward with a major “rectification” campaign against the country’s dominant tech giants.

Alibaba’s has been a key target of this crackdown, and its chief executive Daniel Zhang was vocal in expressing his support for these new regulations amid the earnings report.

A major point of contention for Beijing, is ensuring tech giants do not block other services, thus eroding any potential monopoly.

Alibaba is now taking steps to incorporate its largest rival Tencent’s services into its platform to avoid another major penalty, after it was slapped with a record $2.8 billion fine earlier this year.

“We do see cross-platform openness and connectivity as a positive trend that could unlock greater dividends in the internet era,” Zhang told analysts.

“We are in the process of studying the regulatory requirements, evaluating the potential impacts on our relevant businesses and we will respond positively with actions.

“We believe in the growth of the Chinese economy and long-term value creation of Alibaba and will continue to strengthen our technology advantage in improving the consumer experience.”

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