(Bloomberg) -- Alibaba (NYSE:BABA) Group Holding Ltd. reported the slowest revenue growth since it went public, underscoring how China’s crackdown on its technology sector is taking a financial toll on the e-commerce giant.
Sales rose 9.7% for the three months ending in December, far below the 40%-plus growth that was common before the government scrutiny began, as consumer spending slows and competition intensifies. 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.
Once the most valuable company in China, Alibaba has struggled since Beijing launched a sweeping crackdown on the private sector more than a year ago. The Chinese government forced Alibaba’s finance affiliate, Ant Group Co., to call off what would have been the world’s largest initial public offering in 2020, and then instituted a series of reforms that have undercut Alibaba’s business model.
Alibaba’s shares climbed less than 1% in pre-market trade. Annual active consumers rose 43 million to a better-than-expected 1.28 billion while cloud revenue jumped 20%.
Some analysts had expected the Chinese internet giant to again reduce its forecast for annual revenue, given weakening consumption and an uncertain regulatory environment.
The company warned in November that revenue growth for the fiscal 2022 year would be 20% to 23%, compared with the 27% that analysts had been projecting. Its valuation has dropped from a high of about $860 billion to $291 billion. In a sign of the times, liquor maker Kweichow Moutai Co. is now worth more than Alibaba.
Beijing’s crackdown isn’t over. Bloomberg News reported this week that Chinese authorities are asking the nation’s biggest state-owned firms and banks to start a fresh round of checks on their financial exposure and other links to Ant Group, according to people familiar with the matter. Meanwhile, market volatility has eclipsed Alibaba’s efforts to seek growth outside China. The company recently called off a fund-raising plan for its Southeast Asian retail arm after failing to secure an envisioned valuation.
(Updates with shares from the second paragraph)
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