Anti-monopoly fine pushes Alibaba to first operating loss as public company

The logo of Alibaba Group is seen at its office in Beijing, China January 5, 2021. REUTERS
China's top e-commerce platform Alibaba Group Holding Ltd 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 IPO of its affiliate Ant Group and a $2.8 billion fine in April for anti-competitive business practices.

The fine led to a 7.66 billion yuan ($1.19 billion)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 930 billion yuan ($144.12 billion) for the year ending March 2022, above expectation of 928.25 billion yuan.

Core commerce revenue rose 72 percent to 161.37 billion yuan in the fourth quarter. But growth at its cloud computing unit slowed to 37 percent to 16.8 billion yuan 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 187.4 billion yuan in the fourth quarter, topping a Refinitiv forecast of 180.41 billion yuan.

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 criticizing 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."