On Thursday, Alibaba’s New York-listed shares fell 11%, after reporting disappointing third-quarter sales and earnings, warning that this year̵[ads1]7;s results would be below estimates.
Alibaba’s sales increased by 29% last quarter from a year ago, to 31.1 billion dollars. Wall Street expected revenue of $ 32.1 billion. Earnings per share fell 38% from a year ago and were below expectations.
The company said that sales for the current financial year should increase between 20% and 23% from a year ago. Analysts predicted a growth of almost 28%.
In its results report on Thursday, Alibaba was quoted as saying a “regulatory environment affecting Alibaba’s business operations” and “privacy and data protection regulations and concerns” as some of the uncertainties it faced.
However, Alibaba’s gigantic cloud business continues to deliver impressive results. Revenues increased by 33% from a year ago for that unit. Alibaba Cloud has helped the company expand outside China as well.
“Alibaba continued to invest heavily in our three strategic pillars in domestic consumption, globalization and cloud computing to establish a solid foundation for our long-term goal of sustainable growth in the future,” Alibaba Chairman and CEO Daniel Zhang said in a statement.
“In the middle of a unique year after stricter regulation, without much flexibility, [Alibaba] will have to navigate through the many headwinds as they continue to invest in technology innovation, globalization and expand their reach to domestic consumers, “Citi analysts said in a research report on Friday.
Alibaba’s results come a week after the company ended its annual Singles Day online shopping extravaganza. Chinese consumers continued to shop for bargains during the event, but sales growth for the platform was slower than last year.
Part of this may be due to the regulatory environment, but Alibaba is also facing tougher competition and a downturn in the Chinese economy.
During a conference call with analysts on Thursday, Zhang said that “economic headwinds, combined with increasing market competition, also affected our core business in China.”
He noted that there was a decline in clothing and general merchandise, but that demand for consumer electronics and furniture remained resilient.
On Friday in Hong Kong, JD.com’s shares rose more than 6%.
“Consumers and business partners are increasingly relying on and trusting JD, and we were able to surpass industrial growth in China in the third quarter,” JD.com President Lei Xu said in the earnings report.
JD.com’s Hong Kong-listed shares have risen more than 20% in the last six months, while Alibaba shares have fallen more than 30% over the same time frame.