Alibaba Shares Drop as Company Projects Slowing Growth

Chinese multinational technological company Alibaba Group Holding Ltd. was sailing lower on Monday after the company said it projects revenue growth to slow down this year due to coronavirus economic uncertainty and the potential for tensions between the U.S. disrupting its business.

Shares were down as much as 4% in Hong Kong after a drop of nearly 6% in the U.S. ahead of the weekend.
Alibaba has forecast sales growth this year of at least 27.5% to more than 650 billion yuan ($91 billion). This is down from 35% previously and slightly below analysts’ estimates.

The company has reported a better-than-expected 22% rise in March quarter revenue of 114.3 billion yuan however it was still the slowest pace of expansion on record.

Alibaba reported that net profit for the three months to March 31 plunged by 89% from a year earlier to $447 million. “The year-over-year decrease was primarily due to a net loss in investment income, mainly reflecting decreases in the market prices of our equity investments in publicly-traded companies, compared to a net gain recorded in the same quarter of 2019,” Alibaba said.

“The market is a bit disappointed despite the strength given 2Q guidance of 20-30% YoY growth for JD and 99% GMV growth in 1Q20 for PDD,” CICC analyst Natalie Wu remarked. “We regard Alibaba’s advantage as a market leader as intact and unchanged in the longer run, though it may take several quarters for market sentiment to swing back.”

Chief Financial Officer Maggie Wu said on Friday, “The integrity of Alibaba’s financial statements speak for itself, we have been an SEC filer since 2014 and hold ourselves to the highest standard. We will endeavor to comply with any legislation whose aim is to protect and bring transparency to investors who buy securities on U.S. stock exchanges.”

Alibaba has lost more than $70 billion of market value since January.

Disclaimer: We have no position in Alibaba Group Holding Ltd (NYSE: BABA) and have not been compensated for this article.