Alibaba shares drop on weak outlook, regulatory scrutiny
Chinese e-commerce giant faces pressure after forecasting slower revenue growth and amid ongoing antitrust concerns.
Shares of Alibaba Group Holding Ltd. fell on Tuesday after the company issued a cautious revenue outlook and warned of continued regulatory scrutiny in China.
The Hangzhou-based company projected revenue growth of 4% to 6% for the fiscal year ending March 2025, below analyst expectations of 7.1%, according to a Refinitiv consensus. Alibaba also highlighted risks from China’s antitrust enforcement, which has targeted major tech firms in recent years.
The stock declined 3.2% in premarket trading, extending losses after the company’s fourth-quarter earnings report. Revenue for the quarter rose 7% year-over-year to $30.7 billion, missing estimates of $31.2 billion. Adjusted net income fell 14% to $3.1 billion, reflecting higher costs and investments in cloud computing and international expansion.
Analysts at Citi and Goldman Sachs downgraded Alibaba’s stock following the update, citing concerns over margin pressures and regulatory overhang. Citi cut its price target to $100 from $120, while Goldman reduced its target to $115 from $130.
Alibaba’s cloud computing division, a key growth area, reported revenue growth of 2% year-over-year, down from 3% in the previous quarter. The company attributed the slowdown to weaker demand from internet customers and increased competition.
The broader Chinese tech sector has faced regulatory headwinds since 2020, when Beijing launched a crackdown on monopolistic practices among internet giants. Alibaba, which owns e-commerce platforms including Taobao and Tmall, has been a frequent target of antitrust investigations and fines.
Investors are also monitoring China’s economic recovery, which has been uneven amid property sector turmoil and weak consumer spending. Alibaba’s domestic e-commerce revenue grew 6% in the quarter, slower than the 8% growth recorded in the previous three months.
The company plans to continue investing in AI and international markets, but analysts warn that regulatory risks and macroeconomic challenges could weigh on profitability in the near term.
Priya covers listed equities and corporate earnings, reading quarterly results and guidance for what they signal about sector health and forward valuations.
More from Priya Anand →