Alibaba shares plunged 4% in Hong Kong on Friday, tumbling nearly 33% from their peak in October. The company’s share fell 6.3% in New York after the announcement, down 35% from its peak in the same month of last year, after the company announced its first quarterly operating loss since it went public after it was subjected to a large fine imposed by anti-trust authorities in China.
The large Chinese e-commerce company posted an operating deficit of 7.7 billion yuan ($ 1.2 billion) for the fourth quarter ended in March. The loss came after Alibaba paid the highest-ever Chinese fine of 18.2 billion yuan ($ 2.8 billion) for engaging in monopolistic business practices. The technology company said it would have reported a 48 percent increase in operating income year-on-year at 10.6 billion yuan ($ 1.6 billion) without the penalty. The operating income for the full year was 89.68 billion yuan (14 billion dollars), down 2 percent year on year.
The corporate penalty was also reflected in the final result of Alibaba, as the large Hangzhou-based company saw a net loss of 5.5 billion yuan in the three months ending in March. It recorded a full-year net income of 150.3 billion yuan (23.3 billion dollars).
“During the past fiscal year, we faced all kinds of challenges, including the COVID-19 pandemic, fierce competition as well as antitrust investigation and sanction decision by Chinese regulators,” Chief Executive Daniel Chang said during the earnings announcement on Thursday. “We believe the best way to overcome this challenge is to look forward and invest in the long term,” he adds.
Alibaba reported better-than-expected revenue of 187.4 billion yuan in the fourth quarter of the fiscal year, up 64 percent year-on-year. Full-year revenue jumped 41 percent to 717.3 billion yuan ($ 111 billion).
Behind the growing number was the company’s core e-commerce business, which saw a total merchandise value of about 7.49 trillion yuan ($ 1.1 trillion) in the retail markets for the 2021 fiscal year. Alibaba Cloud, the affiliate cloud computing company, also contributed a 50% rise in revenue. On an annual basis, at 60.12 billion yuan (9.3 billion dollars). Alibaba said it expects to increase its revenue to 930 billion yuan in the fiscal year 2022.
Alibaba shares have been under pressure since its billionaire founder Jack Ma criticized China’s financial regulators during a high-profile speech at a financial forum in October. Authorities quickly took action against the large e-commerce company, including the sudden suspension of its $ 35 billion initial public offerings (IPO) of its subsidiary Ant Group.
Ant Group contributed 7.2 billion yuan ($ 1.1 billion) to Alibaba’s profits in the three months ending in March. Based on Alibaba’s 33% stake in Ant, the fintech unit reported a profit of 21.8 billion yuan in the December quarter, up 49.7% from the previous quarter.
In April, China’s central bank said that Ant must be restructured into a financial holding company, which means it will be subject to stricter regulatory controls.