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PINDUODUO INC.

(PDD)
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Anti-monopoly fine pushes Alibaba to first operating loss as public company

05/13/2021 | 07:26am EDT
FILE PHOTO: The logo of Alibaba Group is seen at its office in Beijing

May 13 (Reuters) - China's top e-commerce platform Alibaba Group Holding Ltd on Thursday posted its first quarterly operating loss since going public in 2014 due to a record anti-monopoly fine by the country's market regulator.

Its U.S.-listed shares fell nearly 3% in choppy trading, even as the company forecast strong 2022 revenue, betting that the pandemic-driven shift to online shopping will remain resilient.

The outlook, however, was overshadowed by a regulatory crackdown in China that led to the suspension of a $37 billion IPO of its affiliate Ant Group and a $2.8 billion fine in April for anti-competitive business practices.

The fine led to a 7.66 billion yuan ($1.19 billion)operating loss in the fourth quarter ended March 31.

"The Penalty Decision motivated us to reflect on the relationship between a platform economy and society, as well as our social responsibilities and commitments," Chief Executive Daniel Zhang said in an earnings call.

Alibaba forecast annual revenue of 930 billion yuan ($144.12 billion) for the year ending March 2022, above expectation of 928.25 billion yuan.

Core commerce revenue rose 72% to 161.37 billion yuan in the fourth quarter. But growth at its cloud computing unit slowed to 37% to 16.8 billion yuan from 58% a year earlier, its weakest since at least 2016.

Alibaba said it was due to a top customer with a "sizeable presence outside of China" ending its business for "non-product related reasons."

Overall revenue rose to 187.4 billion yuan in the fourth quarter, topping a Refinitiv forecast of 180.41 billion yuan.

Alibaba's U.S. listed shares have fallen more than 30% since hitting a record high in late October when its founder Jack Ma delivered a speech in Shanghai criticizing China's financial regulators.

The sinking share price reflects investor anxiety over regulation, said Brock Silvers, chief investment officer at Hong Kong-based Adamas Asset Management.

"The company has faced rogue waves of regulatory risk, which now threaten the entire tech sector."

($1 = 6.4545 Chinese yuan renminbi) (Reporting by Chavi Mehta in Bengaluru and Josh Horwitz in Shanghai; Additional reporting by Subrat Patnaik; Editing by Arun Koyyur)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING LIMITED -0.67% 211.64 Delayed Quote.-9.06%
PINDUODUO INC. -1.00% 121.97 Delayed Quote.-31.35%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.00% 6.39358 Delayed Quote.-1.56%
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Financials
Sales 2021 116 B 18 080 M 18 080 M
Net income 2021 -8 974 M -1 403 M -1 403 M
Net cash 2021 114 B 17 890 M 17 890 M
P/E ratio 2021 -119x
Yield 2021 -
Capitalization 978 B 153 B 153 B
EV / Sales 2021 7,47x
EV / Sales 2022 5,37x
Nbr of Employees 7 986
Free-Float 56,0%
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Mean consensus OUTPERFORM
Number of Analysts 41
Average target price 1 070,24 CNY
Last Close Price 780,21 CNY
Spread / Highest target 90,4%
Spread / Average Target 37,2%
Spread / Lowest Target 2,26%
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Managers and Directors
NameTitle
Lei Chen Chairman & Chief Executive Officer
Jing Ma Vice President-Finance
Jun Yun Xiao Senior Vice President-Operation
Nan Peng Shen Independent Director
Qi Lu Independent Director
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