NewsAlibaba sales surge, even as crackdown in China intensifies

Alibaba sales surge, even as crackdown in China intensifies

-


The company reported a 37% jump in revenue for the quarter ended December compared to a year earlier. That was better than what analysts were expecting, according to forecasts from Refinitiv.

“Thanks to the rapid recovery of China’s economy, Alibaba had another very healthy quarter,” said Daniel Zhang, chairman and CEO of Alibaba, in a press release.

But strong revenue might not be enough to soothe concerns from investors, who have been rattled by worries over how hard Chinese authorities might come down on Ma’s tech empire.

Ma, who co-founded Alibaba more than two decades ago, has watched his businesses draw the ire of Beijing in recent months. He’s also been snubbed by state-run media: On Tuesday, the Shanghai Securities Journal praised prominent Chinese business leaders in an article about “entrepreneurial spirit.” While tech entrepreneurs such as Tencent’s (TCEHY) Pony Ma and Huawei’s Ren Zhengfei were mentioned, Ma was not.

“Alibaba’s earnings can’t help but be overshadowed by the recent reappearance of their leader Jack Ma,” said Andy Halliwell, senior director of retail at digital consultancy Publicis Sapient, in an email. “If the Chinese government is looking to crack down on outspoken entrepreneurs and take a more conservative line with their larger tech businesses, then this will dent investors’ confidence in the brand,” Halliwell added.

Ma built Alibaba into one of China’s most powerful tech titans. It generated nearly $80 billion in revenue for the fiscal year that ended last March, and it has a market capitalization of more than $700 billion, making it one of the world’s most valuable tech companies.

READ  They did the whole lot proper. However after one at-home haircut, a husband and spouse died of Covid-19

But Beijing has become increasingly concerned about the clout that big, private tech firms have over the financial industry and other sensitive areas, and how entrenched they have become to everyday life in China through digital payments apps and other services.

Last November, shares in Alibaba slid even though the company’s earnings topped estimates, as it reported results just after regulators shelved a highly anticipated IPO from its financial affiliate, Ant Group.

Since then, the landscape has worsened for Alibaba and other Chinese tech firms. President Xi Jinping in December called efforts to strengthen anti-monopoly rules against online platforms one of the most important goals for 2021, according to state news agency Xinhua. And regulators announced an antitrust investigation into Alibaba on Christmas Eve.

Ant Group, meanwhile, has been told to overhaul its online financial business after authorities criticized it for edging out rivals from the market place, harming consumer rights and taking advantage of regulatory loopholes for its own profit.

Yi Gang, the governor of the People’s Bank of China, said last week at a virtual Davos forum that regulator involvement in that company is ongoing.

Ma — who has retired from the company but still remains a figurehead — has largely remained out of sight through all of this. He vanished from public view for months before briefly emerging in a video in January to speak to teachers at a philanthropic event.

The issues facing Alibaba and Ant have dented the former’s share price. Alibaba’s New York-listed shares are down about 17% since a peak in late October, a plunge that has wiped off more than $140 billion from its market capitalization. Alibaba shares were up in early trading Tuesday following the earnings release, however.

READ  TikTok is laying off employees in India as ban becomes permanent
READ  'Demon Slayer' turns into Japan's highest-grossing film ever

Some analysts suspect Alibaba may survive regulatory scrutiny from China relatively intact. Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics, said Chinese authorities likely want to be careful “not to kill the goose that lays the golden eggs,” after all.

But experts warn that the days of unchecked growth are probably over.

“It is clear that [Beijing] is going to narrow the scope of managerial independence through regulation and informal ‘guidance’ to the [Alibaba] conglomerate,” said Doug Fuller, an associate professor at the City University of Hong Kong who studies technological development in Asia.

As for Ant Group, the company will likely still be allowed to go ahead with an IPO once regulators are finished grilling the company over anti-monopoly concerns and consumer privacy issues, according to Kevin Kwek, managing director and senior analyst at Alliance Bernstein.

But if it is forced to make any drastic changes, that could hurt Ant’s valuation when it eventually is able to list. Before the IPO was pulled, Ant was expected to become the largest initial public offering ever with a $34 billion share sale.

“You can bet the best minds of Ant [are] working on the challenges as we speak,” Kwek said. “The question is how much they end up ‘giving up’ and what that could mean for valuations.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here
READ  A filter made for astronaut urine might quickly be offering ingesting water on Earth

Latest news

7 Easy Steps to Grow to be a Monetary Advisor in a Firm

Listed here are 7 easy steps to change into a monetary advisor in a company:Earn a Bachelor’s...

The right way to educate your self to extend your physique’s immunity to battle coronavirus?

IntroductionThe life threatening illness COVID-19 had stepped into the Earth and ruined the lives of human beings particularly the...

Why do faculty college students favor Economics to make their profession within the Banking Sector?

Introduction The scholars most well-liked the topic Economics as by this specific topic they will improve their expertise in fixing...

4 methods to enhance English writing abilities – 2021 information

Writing is all about the way you convey your message to your viewers. Essentially the most troublesome half is...

Improve your eyewear wardrobe with these stylish frames in 2021

In case you are searching for a brand new pair of glasses, this text is written precisely for you....

How the new SeekaHost WordPress Hosting Control Panel makes a Business Blog Setup Easy & Profitable

Have you ever been enthusiastic about making a weblog for your corporation or as a freelancer to ultimately earn...

Must read

7 Easy Steps to Grow to be a Monetary Advisor in a Firm

Listed here are 7 easy steps to change into...

You might also likeRELATED
Recommended to you

Translate »
Skip to toolbar
Read previous post:
snow emergency
Counties declare ‘snow emergencies’ as temperatures drop

As temperatures drop every Monday night, WSAZ continues to monitor roads and districts as “snow emergencies” are announced. While several...

Close