Alibaba Posts Operating Loss Of $1.2 Billion Following Antitrust Regulator’s Record Fine

Alibaba Group reported its first quarterly operating loss since the company went public after getting hit with a massive fine imposed by China’s antitrust regulators.

The Chinese e-commerce giant posted an operating deficit of 7.7 billion yuan ($1.2 billion) for its fourth quarter ended March. The loss came after Alibaba was hit with China’ highest-ever fine of 18.2 billion yuan for engaging in monopolistic business practices. The tech firm said it would have reported a 48% increase in operating income year-on-year at 10.6 billion yuan without the penalty. Full-year operating income stood at 89.68 billion yuan, down 2% year-over-year. 

The regulator’s punishment was also reflected in Alibaba’s bottom line. The Hangzhou-based behemoth saw a net loss of 5.5 billion yuan in the three months ended March. It reported a full-year net income of 150.3 billion yuan. 

“During the past fiscal year, we have gone through all kinds of challenges, including the Covid-10 pandemic, fierce competitions as well as the anti-monopoly investigation and penalty decision by Chinese regulators,” CEO Daniel Zhang said in a earnings call on Thursday. “We believe the best way to overcome this challenge is to look forward and invest for the long run”

Alibaba reported a better-than-expected revenue of 187.4 billion yuan for its fiscal fourth quarter, up 64% year-over-year. Full-year revenue jumped 41% to 717.3 billion yuan. 

Behind the increased figure was the company’s core e-commerce business, which saw a gross merchandise value of 7.49 trillion yuan on its retail marketplaces for fiscal 2021. Alibaba Cloud, the company’s cloud computing affiliate, also contributed to the surge with a 50% rise in revenue year-over-year at 60.12 billion yuan. Alibaba said that it expects to see its revenue rise to 930 billion yuan in fiscal 2022. 

Shares of Alibaba slid 4% in Hong Kong on Friday, down almost 33% from its peak in October. The company’s stock dropped 6.3% in New York after the announcement, a 35% drop from its peak the same month last year.

Alibaba’s shares have been under pressure since its billionaire cofounder Jack Ma slammed China’s financial regulators during a high-profile speech at a financial forum in October. Authorities swiftly took action against the e-commerce giant, including an abrupt suspension of the $35 billion initial public offering of its fintech affiliate Ant Group.

Ant contributed 7.2 billion yuan to Alibaba’s earnings in the three months ended March. Based on Alibaba’s 33% stake in Ant, the fintech unit posted a profit of 21.8 billion yuan in the December quarter, up 49.7% from the previous quarter.

In April, Chin’s central bank said that Ant will need to restructure as a financial holding company, which means that it would be subject to tighter regulatory controls.