Alibaba warns of slower growth after missing Wall Street’s earnings estimates
The company also said that sales for its current fiscal year should rise between 20% and 23% from a year ago. Analysts were predicting growth of nearly 28%.
In its earnings release, Alibaba cited “regulations” and a “regulatory environment that affect Alibaba’s business operations” as well as “privacy and data protection regulations and concerns” as some of the uncertainties it was facing.
Earlier this year, Alibaba was forced to cancel plans to take its Ant Group affiliate, which owns fintech giant Alipay, public.
Alibaba’s giant cloud business continues to post impressive results though. Revenue rose 33% from a year ago for that unit. Alibaba Cloud has helped the company expand beyond China as well, a key goal.
“Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization, and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future,” Alibaba chairman and CEO Daniel Zhang said in a statement.
Part of that is probably because of the regulatory environment, but Alibaba is also facing tougher competition as well as a slowdown in the Chinese economy.
During a conference call with analysts Thursday, Zhang said “economic headwinds, coupled by intensifying market competition also affected our core commerce business in China.”
He noted that there was a slowdown in apparel and general merchandise but that consumer electronics and furniture demand remained resilient.
“Consumers and business partners increasingly trust and rely on JD, and we were able to outpace the industry growth in China in the third quarter,” JD.com president Lei Xu said in the earnings release.
JD.com’s stock has surged more than 25% in the past six months while Alibaba shares have fallen nearly 25% during the same time frame.