Alibaba with a Bad Reputation... Annual Sales Forecast Downgraded (Comprehensive)

Sales Forecast Below Expectations for 2 Consecutive Quarters
Stock Price Drops 11.13% Due to Poor Performance

[Asia Economy Reporter Cho Hyun-ui] Alibaba, China's largest online shopping mall operator, has lowered its annual sales forecast due to intensified competition and decreased consumption, in addition to regulatory pressures from authorities.

Bloomberg reported on the 18th (local time) that this was due to "sales falling short of market expectations for the second consecutive quarter."

Alibaba announced that its third-quarter sales reached 200.7 billion yuan (approximately 37.19 trillion KRW), a 29% increase compared to the same period last year. However, this fell short of the market forecast of 207.4 billion yuan compiled by Bloomberg.

Net profit plunged 87% to 3.4 billion yuan (approximately 630 billion KRW) during the same period. The annual sales forecast anticipates growth of 20-23% compared to the previous year, which is also lower than the market expectation of 27%.

Alibaba fell out of favor with authorities after founder Jack Ma openly criticized Chinese financial regulators in October last year. Following several pressures, including a 3 trillion won antitrust fine imposed in April, Alibaba has been proceeding with its business as cautiously as possible.

Due to cautious marketing to avoid regulatory scrutiny, the sales growth rate during this year's Singles' Day period was only 8.4%, about one-tenth of last year's 85.6%. This is the first time Alibaba's Singles' Day sales growth rate has recorded a single-digit figure since the first event in 2009.

Bloomberg stated, "The disappointing performance shows that Alibaba, once a popular stock, has been struggling under regulatory pressures."

Following the poor results, Alibaba's stock price plunged 11.13% on the New York Stock Exchange that day. Analysts reportedly bombarded Alibaba's management with questions about how the company plans to grow long-term and how it will fend off competitors.

Daniel Zhang, Alibaba's CEO, told analysts that he would reveal specific details at the annual shareholder forum on December 16. He added, "Alibaba will continue to invest in globalization, cloud computing, and data intelligence," and "We will add features to enrich Alibaba's platform and retain customers."

Bloomberg reported, "Since COVID-19 first emerged in Wuhan, competition within China has intensified," adding, "As consumption declines amid the spread of COVID-19, competitors JD.com and Pinduoduo are increasing investments to challenge Alibaba."

JD.com aggressively attracted new brands such as Starbucks and Est?e Lauder, recording sales of 349.1 billion yuan during this year's Singles' Day period, a 28.6% increase compared to the same period last year. Founded in 2015, Pinduoduo surpassed Alibaba this year to become the number one in user numbers.

However, there is speculation that the breakup of companies as part of China's big tech regulations could benefit Alibaba in the long term. Bloomberg noted, "Attempts by Alibaba's competitor Tencent to make it easier to share links from Alibaba's platforms like WeChat could ultimately have a positive impact." CEO Zhang also welcomed this, saying, "We welcome the increasing openness of the internet space."

This content was produced with the assistance of AI translation services.