Alibaba sales growth plumbs new lows while uncertainty escalates

US$40B loss of market value since January

Alibaba Group Holding Ltd. expects revenue growth to slow this year, reflecting post-COVID 19 economic uncertainty at home as well as the potential for U.S.-Chinese tensions to disrupt its business.

The e-commerce giant forecast sales growth this year of at least 27.5 per cent to more than 650 billion yuan (US$91 billion), down from 35 per cent previously and slightly below analysts’ estimates. While it posted a better-than-expected 22-percent rise in March quarter revenue of 114.3 billion yuan, that marked its slowest pace of expansion on record. Alibaba’s shares slid more than five per cent in New York.

Online shopping began to bounce back from March, executives said Friday. But the tepid outlook demonstrates the world’s second-largest economy has yet to fully shake off

COVID-19, with consumers still hesitant about spending on big-ticket items. Asia’s largest corporation is tackling also the rise of rivals such as ByteDance Ltd. and Pinduoduo Inc. And the Tmall operator is going head-tohead with Tencent Holdings Ltd. for internet leadership in everything from online media to payments and cloud computing.

Alibaba has lost more than US$40 billion of market value since the coronavirus first erupted in January, and now has to grapple with not just an uncertain global economic environment but also any potential fallout from U.S.-Chinese financial tensions. On Friday, executives sought to assuage concerns about a U.S. bill that mandates much closer accounting scrutiny of U.S.-listed Chinese companies and may bar them from American bourses.

Chief financial officer Maggie Wu said Alibaba’s financial statements have been consistently prepared in accordance with U.S. GAAP accounting measures and were beyond reproach. “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,” she told analysts on a conference call. “We will endeavour to comply with any legislation whose aim is to protect and bring transparency to investors who buy securities on U.S. stock exchanges.”

The bigger short-term challenge is in reviving growth: Alibaba’s bread-andbutter customer management or marketing business grew just three per cent in the March quarter. Much of that stems from weaker consumer sentiment during the coronavirus-stricken quarter, when total Chinese e-commerce rose just 5.9 per cent or at less than a third of 2019’s pace, according to government data.

Rival PDD posted a revenue rise of 44 per cent on Friday, down sharply from 91 per cent in the previous quarter, although that still beat expectations. Its sales and marketing expenses jumped 49 per cent.

Alibaba’s net income was 3.2 billion yuan, down 88 per cent from a year ago when it booked an 18.7-billion-yuan one-time gain on investments.