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Friday, December 3, 2021

Alibaba Reduces Sales Prospects Due to Decreased Competition and Demand

Chinese e-commerce giant Alibaba Group Holding Ltd. cut its annual earnings growth forecast due to increased competition and regulatory restrictions, causing its stock to fall 11%.

Alibaba now expects revenue for the year ending March to grow 20-23 percent, the slowest rate since its debut in the stock market in 2014 and below its May forecast of 29.5 percent. The company also fell short of expectations for earnings per share in the second quarter.

Chinese buyers have become more cautious about spending amid the COVID-19 outbreaks, which, combined with supply disruptions, contributed to a slowdown in China’s economic growth this quarter.

“These economic hurdles, coupled with heightened market competition, have also impacted our core commercial business in China,” Alibaba CEO Daniel Zhang said in a statement to the income statement, adding that this has particularly affected the demand for apparel and general goods. destination.

But analysts also noted that while Alibaba suffered slower-than-expected growth in demand for fashion and accessories, its competitors did much better in apparel sales.

At the same time, large e-commerce companies in China are struggling with e-commerce expansion of apps like Kuaishou for short videos and ByteDance’s Douyin, which are now capitalizing on unprecedented regulatory efforts to bring more competition to the market.

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“We are seeing increased competition further reduce Alibaba’s market share and widen the difference in Alibaba’s earnings growth over peers,” analysts at Daiwa Capital Markets said in a research note.

JD.com Inc. also released quarterly results on Thursday, but beat market expectations, pushing its stock up 6 percent.

For the quarter ended September 30, Alibaba earned $ 1.75 per share on an adjusted basis, below the $ 1.93 average.

Revenue rose 29 percent, the lowest increase in six quarters, to $ 31.4 billion, just below the Refintiv consensus.

Alibaba said it recorded single-digit gains in gross merchandise value in kind, a key online retail metric for the total value of merchandise sold through a marketplace, but did not provide further details or comparisons to previous quarters.

Including Thursday’s losses, Alibaba shares have lost a whopping 38 percent this year, valuing the company at around $ 390 billion. Its shares in Hong Kong fell 10.6% on Friday.

Ant Group, Alibaba’s fintech subsidiary, posted quarterly profit of about $ 3 billion in the quarter ended June, up 39 percent. Alibaba records profit from Ant Group for the quarter overdue.

Josh Horwitz and Subrat Patnaik

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World Nation News Deskhttps://www.worldnationnews.com
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