By Dhirendra Tripathi
Investing.com – Alibaba ADRs (NYSE:BABA) slumped 8% in premarket trading Thursday after a 10% rise in third quarter revenue marked the slowest growth for the internet giant since going public in September 2014.
It is a sharp reversal in fortunes for a company used to a 40%-plus growth and underscores the impact of the crackdown on its operations by the Chinese government. Consumer spending slowed too while competition grew.
Net income tumbled 74% to 20.4 billion yuan ($3.2 billion) after the company took a big hit from losses in its global investment portfolio. Some warnings were in place for this at the time of the 11-day China’s Single’s Day online sales fest held in November.
For Alibaba, which first started the practice as a single-day event in 2009, gross merchandise volume grew 8.5% to $84.5 billion, the first time in history that growth slowed below 10%. Sales from the extravaganza at rival JD.com (NASDAQ:JD) had grown 29%.
The company closed December with 1.28 billion active customers, adding 43 million in the December quarter. Cloud revenue jumped 20%.
The Chinese government forced Alibaba’s finance affiliate Ant Group to call off what would have been the world’s largest initial public offering in 2020. It went on to create more challenges for the company’s businesses.
According to a Bloomberg report this week, the authorities have asked the state-owned firms and banks to start a fresh round of checks on their financial exposure and other links to Ant Group.