On Thursday, Alibaba’s New York-listed shares slid 11%, after it reported disappointing sales and earnings for the third quarter and warned that results for the year will be below estimates.
Alibaba’s sales grew 29% last quarter from a year ago, to $31.1 billion. Wall Street was expecting a revenue of $32.1 billion. Earnings per share fell 38% from a year ago and were below expectations.
The company said that sales for its current fiscal year should rise between 20% and 23% from a year ago. Analysts were predicting growth of nearly 28%.
In its earnings release on Thursday, Alibaba cited a “regulatory environment that affect Alibaba’s business operations” and “privacy and data protection regulations and concerns” as some of the uncertainties it was facing.
Alibaba’s giant cloud business continues to post impressive results though. Revenue rose 33% from a year ago for that unit. Alibaba Cloud has helped the company expand beyond China as well.
“Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization, and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future,” Alibaba chairman and CEO Daniel Zhang said in a statement.
“Amid an unprecedented year following tightened regulation, without much flexibility, [Alibaba] will need to navigate through the multiple headwinds while continuing to invest in technology innovation, globalization and expand its domestic consumer reach,” Citi analysts said in a research report on Friday.
Alibaba’s results come one week after the company wrapped up its annual Singles Day online shopping extravaganza. Chinese consumers continued to shop for bargains during the event, but sales growth for the platform was slower than last year.
Part of that may be because of the regulatory environment, but Alibaba is also facing tougher competition as well as a slowdown in the Chinese economy.
During a conference call with analysts Thursday, Zhang said “economic headwinds, coupled by intensifying market competition also affected our core commerce business in China.”
He noted that there was a slowdown in apparel and general merchandise but that consumer electronics and furniture demand remained resilient.
On Friday in Hong Kong, JD.com’s shares rose more than 6%.
“Consumers and business partners increasingly trust and rely on JD, and we were able to outpace the industry growth in China in the third quarter,” JD.com president Lei Xu said in the earnings release.
JD.com’s Hong Kong-listed stock has surged more than 20% in the past six months, while Alibaba shares have fallen more than 30% during the same time frame.