|From: Glenn Petersen||9/13/2021 9:40:54 AM|
|Alibaba slides on report China plans to break up payment app|
Published5 hours ago
Shares in Chinese technology giant Alibaba have fallen sharply after a report that its financial affiliate Ant Group is again under scrutiny.
Regulators want to break up Alipay, which is China's biggest payments app with more than a billion users, according to the Financial Times.
A separate platform for the app's profitable lending operation would be created under the plan.
It would be the latest move by Beijing to tighten its grip on big businesses.
Ant could also be forced to hand over the user data that underpins its loans decisions to a new credit scoring firm, which would be partly state-owned, the report said.
Alibaba shares closed 4.2% lower in Hong Kong trade on Monday.
Ant Group did not immediately respond to a request for information from the BBC.
This would not be the first time that Ant Group has been targeted by the Chinese government.
The business empire of Jack Ma, the co-founder of both Ant Group and Alibaba, has been hit by a series of high-profile regulatory measures.
Chinese authorities started to show increasing interest in Ant Group in October last year after Mr Ma criticised regulators, suggesting that they were stifling innovation.
The following month, regulators scuppered the record $37bn (£27bn) share market launch of Ant Group.
In April, Alibaba was hit with a record $2.8bn fine over monopoly concerns.
At the same time, Chinese regulators called on Ant to conduct a sweeping business overhaul, including restructuring itself into a financial holding firm.
It was also told to fold its two micro-loan services, Jiebei and Huabei, into the new finance firm.
Ant will not be the only Chinese online lender to be affected by the new rules, the FT report said.
In recent months, Chinese regulators have been targeting other internet giants in a wide-ranging crackdown which has included competition and privacy issues, as well as user data and cryptocurrencies.
Alibaba slides on report China plans to break up payment app - BBC News
|RecommendKeepReplyMark as Last Read|
|From: galaxy8||9/22/2021 7:15:08 PM|
|From Yahoo msg board: All the people bad mouthing BABA are the same people that think they are so smart paying 40-100 times sales for companies with negative earnings …. Currently earnings seem not to matter in this market, however at one point they always do.|
Look at SE …. It’s worth $185 billion which is 46% of BABA market cap …. SE has trailing revenue of $4.4 billion and negative earnings
BABA has trailing earnings of $23.5 billion … yes that’s correct earnings not revenue. BABA has 5.34 times the earnings that SE has revenues.
So all the clowns thinking they are smart buying SE at an absurd valuations on any metric (even on a forward basis) and trashing BABA. Just remember earnings and valuation do matter at some point. I’d hate to be playing musical chairs when all of a sudden they do matter.
BABA is not a broken company, it is a victim of a broken sentiment. Over time sentiment changes and in the end when entering a long position valuation does matter.
So you can buy SE at 42 times sales with negative earnings and sky high expectations. Or buy BABA at 3.5 times sales, a PE of 18 and extreme low expectations.
I know which one I am more comfortable owning, do you?
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||10/3/2021 5:38:12 AM|
|Countdown Starts on Chinese Company Delistings After Long U.S.-China Audit Fight|
The three-year countdown will accelerate a decoupling of the world’s two largest economies
By Dawn Lim in New York and Jing Yang in Hong Kong
Wall Street Journal
Oct. 2, 2021 7:00 am ET
U.S. securities regulators have started a countdown that will force many Chinese companies to leave American stock exchanges, after a long impasse between Washington and Beijing over access to the companies’ audit records.
The action will accelerate the decoupling of the world’s two largest economies and affect investors that own securities in more than 200 U.S.-listed Chinese companies with a combined market value of roughly $2 trillion.
In late 2020, then-President Donald Trump signed a law that bans the trading of securities in foreign companies whose audit working papers can’t be inspected by U.S. regulators for three years in a row. The passing of the Holding Foreign Companies Accountable Act followed nearly a decade of failed attempts by regulators in the U.S. and China to resolve sharply differing expectations over how such audit inspections would be carried out.
The Securities and Exchange Commission is working out details of how the law will be implemented and is finalizing its associated rules. Its chairman, Gary Gensler, has said the clock started ticking this year.
The SEC expects that U.S. regulators could flag Chinese companies in 2022 if they don’t get access to audit work involving 2021 financials of those companies, a person familiar with the matter said.
Anticipating the outcome, some investors have exchanged their American depositary receipts in Chinese companies for shares that trade on Hong Kong’s stock exchange.
New York fund manager WisdomTree Investments in late 2020 swapped ADRs of Alibaba Group Holding Ltd. for the e-commerce giant’s Hong Kong-listed shares, in some exchange-traded funds. The firm is monitoring Hong Kong trading volumes to determine whether it should convert other companies’ ADRs, said Liqian Ren, a quantitative investment specialist.
Wim-Hein Pals, head of the emerging markets equity team at Netherlands-based asset manager Robeco, said he swapped all Chinese ADRs to Hong Kong-listed shares where possible between last year and early this year. Chinese ADRs now represent just 1.5% of his roughly $1.4 billion emerging-markets portfolio.
“We see liquidity moving gradually but consistently to Hong Kong over the next couple of years. More and more investors will go to the Hong Kong-listed names, and neglect their U.S.-listed shares,” Mr. Pals predicted.
Since Alibaba’s landmark secondary listing in Hong Kong in late 2019, 15 more U.S.-listed Chinese companies added so-called homecoming listings in the Asian financial hub, according to Hong Kong stock exchange data. Recent data shows most trading still occurs among Chinese ADRs.
For years, U.S. regulators said they never got the transparency they needed into the work of auditing firms on Chinese companies, because China wasn’t routinely handing over the papers they needed or negotiating in good faith.
The Chinese side, on multiple occasions, said it opposes “politicization of securities regulation,” and that it welcomes dialogue to find a solution.
For data-heavy internet companies, which make up the bulk of U.S.-listed Chinese companies, audit working papers can contain raw data such as meeting logs, user information and email exchanges between companies and government agencies, among other things. In the U.S., the inspections are done by the Public Company Accounting Oversight Board, which the SEC oversees.
China has also said giving a foreign government access to such details for data-heavy tech companies could endanger state security. Earlier this year, Chinese officials wanted ride-hailing giant Didi Global Inc. to put off its New York listing until they could address the audit working paper issues, The Wall Street Journal previously reported.
U.S. officials, in turn, have said China has used the national security argument as a ruse to not open up companies’ books.
The audit standoff has long been a contentious point in cross-border relations between the two countries. For more than a decade, the PCAOB, which functions essentially as the auditor of auditors, has struggled to inspect China-based audit firms, as well as the mainland Chinese affiliates of the Big Four accounting firms.
In 2013, the U.S. and China had a brief breakthrough. Both sides agreed to allow the PCAOB to inspect work done by auditors of U.S.-listed Chinese companies that were being investigated by regulators.
The China Securities Regulatory Commission subsequently turned over the audit papers of four companies for PCAOB’s review. The 2013 pact also paved the way for both sides to talk about a broader set of inspection protocols.
In late 2015, officials from both countries met in Beijing to try to establish those protocols. After two weeks of negotiations, the talks broke down. One deal breaker: Chinese officials weren’t willing to let the U.S. inspect the audit papers of Alibaba and Baidu Inc., two of the most valuable Chinese companies listed on American exchanges.
Shaswat Das, the PCAOB’s chief negotiator at the time, said he understood from prior talks with the Chinese that access would be granted, and took their response—that they needed to consult with other ministries and the State Council first—as a sign they weren’t negotiating in good faith.
The Chinese side had expected the U.S. to eventually come around to “regulatory equivalence,” an arrangement that China has with the European Union, said Paul Gillis, professor of practice at Peking University’s Guanghua School of Management and a former member of the PCAOB Standing Advisory Group. “It basically means the U.S. would accept the work done by the Chinese regulator as if they had done it themselves,” he said.
That wasn’t acceptable to the U.S., people familiar with the SEC and PCAOB’s thinking said.
U.S. and Chinese officials tried to revive talks afterward, but they couldn’t agree on key issues. One sticking point was China’s restricting of information that U.S. regulators considered essential. In 2017, when the PCAOB attempted to inspect an audit of a China-based company, the Chinese didn’t produce the working papers the U.S. demanded and redacted others, according to an oversight board letter to government officials.
In the absence of a resolution, the Holding Foreign Companies Accountable Act was introduced in March 2019.
In April 2020, the CSRC proposed a joint inspection framework under which U.S. officials can conduct inspections and investigations in China with Chinese officials present and access audit papers of companies deemed relevant by the Chinese side.
Accounting irregularities at Luckin Coffee, a rival to Starbucks in China, hardened many politicians’ resolve to push through a bill to enforce tighter audit standards. PHOTO: MARK SCHIEFELBEIN/ASSOCIATED PRESS
The proposal was seen as imposing “critical limitations” on the PCAOB’s ability to conduct inspections, according to the oversight board letter.
Around the same time, Luckin Coffee Inc., an upstart rival to Starbucks Corp. in China, admitted to fabricating revenues and expenses. The accounting chicanery hardened many politicians’ resolve to push through a bill to enforce tighter audit standards.
Luckin’s implosion also caused embarrassment back home. The CSRC publicly criticized the company but stopped short of taking any regulatory actions, because Luckin is registered in the Cayman Islands and listed in the U.S.
The CSRC offered an amended proposal to the PCAOB in August 2020. It is unclear what discussions followed.
In June this year, the Senate passed another bill that, if enacted, would shorten the three-year timetable for delistings to two years.
In August, CSRC Chairman Yi Huiman said promoting China-U.S. cooperation on auditing oversight is one of the regulator’s top priorities for the remainder of this year.
The looming threat of delistings gives U.S. officials key leverage on the negotiating table against the Chinese side. “If the U.S. is going to have any success at the negotiating table, this legislation has got to be implemented,” said Mr. Das, who is now a lawyer at King & Spalding LLP in Washington.
Write to Dawn Lim at firstname.lastname@example.org and Jing Yang at Jing.Yang@wsj.com
Countdown Starts on Chinese Company Delistings After Long U.S.-China Audit Fight - WSJ
|RecommendKeepReplyMark as Last Read|
|From: Julius Wong||10/14/2021 8:48:30 AM|
How Alibaba Makes Money
Alibaba's core e-commerce segment generates the largest share of total revenue
Alibaba Group Holding Ltd. ( BABA) is a holding company legally domiciled in the Cayman Islands but which conducts its e-commerce businesses through its Chinese subsidiaries and variable interest entities ( VIEs). Its primary business is to offer a digital marketplace where consumers and merchants can connect and buy and sell from each other. Alibaba operates its business through four primary segments, led by its giant e-commerce operations.1
Chief among its competitors are other established Chinese e-commerce and Internet companies, such as Tencent Holdings Ltd., as well as global and regional e-commerce companies, such as Amazon.com Inc. ( AMZN). Since Alibaba also operates in the cloud-computing business and digital-media and digital-entertainment businesses, it competes with companies specializing in those markets as well.2
Alibaba provides digital marketplaces for merchants and consumers.Alibaba's largest business is its core e-commerce operations.Alibaba aims to be a leader in the development of the infrastructure of commerce.Alibaba and other giant tech companies in China have been ordered by Chinese authorities to stop blocking users of their apps from accessing rivals' services from within those apps.
Alibaba's FinancialsAlibaba files financial statements with the U.S. Securities and Exchange Commission ( SEC) and does so in accordance with generally accepted accounting principles ( GAAP). The company follows a reporting schedule where the end of its fiscal year ( FY) occurs at the end of March.3
The company also reports certain non-GAAP financial measures, such as adjusted earnings before interest, taxes, amortization, and depreciation ( EBITDA), and adjusted EBITA, which refers to earnings before interest, taxes, and amortization.4 Although Alibaba's reporting currency is the Renminbi, the company provides conversions into U.S. dollars, which are used in this story.5
Alibaba reported financial results in early August for Q1 of its 2022 fiscal year ( FY), the three-month period ended June 30, 2021. Net income fell 7.8% year over year ( YOY) to $6.6 billion. Revenue, however, rose 33.8% YOY to $31.9 billion. Adjusted EBITA, the profit metric Alibaba uses for its individual business segments, was down 8.0% to $6.5 billion.6
In its quarterly earnings report the company highlighted the growth in its annual active consumers, which increased to approximately 1.2 billion. Alibaba also noted that it was investing its excess profits and additional capital to support its merchants and for continued growth into new markets. The company said it was increasing its share repurchase program from $10 billion to $15 billion, which is the largest share buyback program in its history.7
Alibaba’s Business SegmentsAlibaba monetizes its services through four main business segments that it formally names as follows:
Commerce (formerly Core Commerce)Cloud ComputingDigital Media and EntertainmentInnovation Initiatives and OthersThe company provides segment breakdowns of revenue and adjusted EBITA. The company also reports certain unallocated items, which primarily relate to corporate administrative costs and other miscellaneous items not allocated to its individual segments.8 These unallocated items were excluded from the percentages in the pie charts below and in the individual business segment sections below.
CommerceAlibaba's commerce segment is comprised of its various digital retail and wholesale marketplaces, as well as logistics and local consumer services. The company generates revenue from merchants through the sale of a variety of marketing services, membership fees, customer management services, product sales, commissions on transactions, and software service fees. The company generates revenue from local consumers through platform commissions and on-demand delivery service fees.9
The commerce segment is Alibaba's largest source of revenue at $27.9 billion, or about 88% of the company's total revenue, as of Q1 FY 2022. Revenue for the segment grew 35.2% compared to the same three-month period a year ago.10
In terms of income measures, the commerce segment represents about 99% of the company's adjusted EBITA, which fell 11.0% to $7.1 billion in Q1 FY 2022.11 Losses in two of Alibaba's other business segments partly account for the higher-reported figure in the commerce segment than in adjusted EBITA for the company as a whole.
Cloud ComputingAlibaba Cloud provides enterprise customers with a complete suite of cloud services, including database, storage, management and application services, big data analytics, a machine-learning platform, and other services.12 The company's cloud computing segment generates revenue from enterprise customers based on the duration and specific usage of the services.13
Cloud computing is Alibaba's second-largest source of revenue at $2.5 billion, or about 8% of total revenue, as of Q1 FY 2022. Revenue for the segment grew 29.1% compared to the year-ago quarter.10
Alibaba reported adjusted EBITA of $53 million for its cloud computing segment in Q1 FY 2022, compared to a loss in adjusted EBITA in the year-ago quarter. The cloud computing segment makes up less than 1% of overall adjusted EBITA.11
Digital Media and EntertainmentAlibaba's digital media and entertainment segment exists as part of the company's strategy to capture revenue from consumption beyond its core commerce businesses.12 The segment generates revenue primarily from customer management services, self-developed online games, and membership subscription fees.14
Digital media and entertainment is Alibaba's third-largest source of revenue at $1.3 billion, or about 4% of total revenue, as of Q1 FY 2022. Revenue for the segment grew 15.4% compared to the same quarter a year ago.10 Alibaba reported a $65 million loss in adjusted EBITA for the segment in Q1 FY 2022.11
Innovation Initiatives and OthersAlibaba's innovation initiatives and others segment aims to innovate and develop new services and products that can meet the needs of its customers. Past innovations include digital-navigation app Amap and network-communication app DingTalk.15 The segment generates revenue primarily through services fees and product sales to consumers and enterprise customers.13
Innovation initiatives and others comprise the smallest share of Alibaba's revenue at $213 million, or less than 1% of total revenue, as of Q1 FY 2022. Revenue for the segment rose 37.2% compared to the same three-month period a year ago.10 Alibaba posted a $333 million loss in adjusted EBITA in Q1 FY 2022.11
Alibaba's Recent DevelopmentsOn Sept. 13, 2021, The Wall Street Journal reported that China ordered the country's big tech giants, including Alibaba, to stop blocking users of their apps from accessing competitors' services from within those apps. The move by the Chinese authorities is part of a wider-ranging crackdown on the country's technology sector. Alibaba is among other big tech companies in China that have been hit with recent fines for anticompetitive practices.16
How Alibaba Reports Diversity and InclusivenessAs part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Alibaba and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Alibaba releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.
Below is a table of potential diversity measurements. It shows whether Alibaba discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ?. It also shows whether Alibaba breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.
Alibaba Diversity and Inclusiveness Reporting
| ||Race||Gender||Ability||Veteran Status||Sexual Orientation|
|Board of Directors|| ||?|| || || |
|C-Suite|| ||?|| || || |
|General Management|| || || || || |
|Employees|| || || || || |
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||10/17/2021 8:46:41 PM|
|Alibaba Faces New Threat: an Evolving Chinese Shopper|
E-commerce company, already under regulatory scrutiny, is losing market share as consumers shift from targeted product searches to browsing and interaction
By Stephanie Yang
Wall Street Journal
Oct. 17, 2021 5:30 am ET
Alibaba was China’s unassailable e-commerce champion for more than 15 years. PHOTO: QILAI SHEN/BLOOMBERG NEWS
TAIPEI— Alibaba Group Holding Ltd. BABA 0.73% , challenged by Beijing’s yearlong clampdown on private enterprise, is facing another problem: growing competition.
For more than 15 years, Alibaba was China’s unassailable e-commerce champion. The company founded by Jack Ma rose to become one of the world’s biggest and most valuable businesses, using hard-knuckle tactics to muscle out challengers.
As China’s e-commerce industry has matured, consumers have started to embrace new ways of shopping that favor browsing and interaction over targeted product searches. That trend has left Alibaba playing catch-up in some areas, and competitors have used the shift to gain a foothold in the world’s largest online retail market.
Alibaba remains the leading platform in online shopping, but its share of China’s retail e-commerce market has fallen to a projected 51% in 2021 from 78% in 2015, according to research firm eMarketer.
Making inroads against Alibaba have been rival Tencent Holdings Ltd. TCEHY 1.80% , which is incorporating online stores into its ubiquitous WeChat social-messaging app; Pinduoduo Inc., a six-year-old e-commerce app that has injected gamelike elements into shopping and drawn in bargain hunters with lower-priced goods; and Douyin, TikTok’s sister app in China, which is selling products through short videos and live-streaming with the help of its algorithms.
Alibaba has responded by investing more in areas such as content creation, live-streaming and discount goods. In May, Chief Executive Daniel Zhang listed increased competition as one of the company’s biggest obstacles of the past year and said any profit that exceeded last year’s would be poured back into improving its e-commerce businesses.
“When we used to talk about marketplace-based core, it was Taobao and Tmall,” Mr. Zhang said in August, referring to the company’s flagship shopping platforms. “But now we’re working hard on building all these different businesses, each with its own unique and compelling value proposition.” When asked about its initiatives to address competition, Alibaba referred to its past news releases and earnings statements.
Alibaba’s revenue still dwarfs that of other players in Chinese e-commerce, and its enormous size continues to give it major advantages. Alibaba’s size, however, has put the company in the crosshairs of regulators, who have been going after China’s tech giants.
WeChat has become an e-commerce force, with its more than one billion users who can browse and buy goods without leaving the app. PHOTO: GILLES SABRIE/BLOOMBERG NEWS
Earlier this year, Beijing’s top market regulator found that Alibaba had abused its market position to keep its merchants from selling on competing platforms. The company was fined a record $2.8 billion in April. At the time, Alibaba said it accepted the penalty and vowed compliance.
Still, analysts said the increasing pressure on Chinese tech companies to play fair could limit how quickly and aggressively Alibaba can react to new threats.
Alibaba’s newest rivals face their own trials. Pinduoduo isn’t profitable and has relied on subsidies for some of its growth. The majority of Douyin’s sales last year were completed through platforms run by such competitors as Alibaba or JD.com Inc. Pinduoduo and ByteDance Ltd., which operates Douyin, declined to comment.
WeChat is under regulatory pressure to open its huge social-media and messaging ecosystem, its greatest advantage in commanding traffic, to other e-commerce players. Tencent declined to comment.
A consumer trend that worked against Alibaba was the shopping shift from search to browsing. While many Chinese consumers still go directly to Alibaba’s Taobao or Tmall to look for products, others have been pulled into purchases while they are interacting digitally or consuming online content.
Le Xinru, a 31-year-old accountant in Guangzhou, uses live-streaming platforms to shop for products including food and electronic appliances, a habit that has replaced her need for traditional e-commerce apps.
Ms. Le said she browses Douyin for more than an hour each day, while lining up for meals at her company’s canteen, commuting or lying on the sofa after putting her child to bed. The platform saves her time with its well-suited recommendations, she said.
Douyin, which sells products through short videos and live-streaming with the help of its algorithms, has been making inroads against Alibaba. PHOTO: MARK SCHIEFELBEIN/ASSOCIATED PRESS
“The quality is now no different from those merchants on traditional e-commerce sites,” she said. “The platform that can offer consumers more interesting products or persuade them to buy in a more interesting way or offer lower prices wins.”
Douyin established a stand-alone e-commerce team last year and has since started banning links to outside sellers, encouraging more brands to sell on its app and using its own payment platform to complete transactions.
Xiong Wanting, a 25-year-old merchant from Suizhou in central China, used to sell succulents on Taobao before jumping ship for Douyin a year ago. Ms. Xiong said she likes the ability to show off her wares on video, while it was difficult for her to get enough followers on Taobao to live-stream successfully.
“So long as I have the capability and the supply of goods, I can open a store and live-stream,” Ms. Xiong said.
In January, the Taobao Live app was revamped to enable sellers to share short lifestyle and product videos. The app also adopted other popular features from competitors, including improving its algorithms to provide more customized recommendations and building interactive circles for influencers and ordinary buyers to connect, Alibaba employees said.
‘The power of Alibaba will be diluted in the future.’ — Mike Ling, a merchant with a yogurt-drink business WeChat has also become an e-commerce force, with its more than one billion users who can browse and buy goods without leaving the app. WeChat has said the value of total merchandise sales through its mini-programs, which function as lite apps embedded in its platform, more than doubled in 2020 from 2019’s $123.5 billion.
Beijing-based merchant Mike Ling said he opened a yogurt-drink business a few years ago on both Alibaba’s Taobao and JD.com. But last year the majority of his customers came through his mini-program on WeChat. As a result, Mr. Ling said, he has reduced his ad spending on traditional e-commerce platforms in favor of his WeChat store.
“The power of Alibaba will be diluted in the future,” he said. “There’s just so many merchants selling goods on WeChat right now.”
Meanwhile, the battlefield for new customers has shifted to less-developed cities, where Pinduoduo has grown through its aggressive pricing. Last year, the company surpassed Alibaba in annual active users, though its buyers tend to spend much less on each purchase.
Alibaba initially responded by focusing on an existing group-shopping app, but it underestimated how price-sensitive Pinduoduo’s customers were, Alibaba employees said.
Alibaba then shifted its focus in 2020 to another app, Taobao Deals, which joined with factories to develop new products at low prices. For instance, it created an electric toothbrush priced at less than 10 yuan, or the equivalent of about $1.50, according to Alibaba Vice President Wang Hai. The product took about a month to develop and sold 100,000 units in the first few days.
“The industry’s biggest point of growth is the opportunity in consumers in lower-tier cities,” Mr. Wang said.
For the 12 months ended in June, Taobao Deals had more than 190 million annual active users. Mr. Wang was promoted to a partner of Alibaba this year.
Alibaba Faces New Threat: an Evolving Chinese Shopper - WSJ
|RecommendKeepReplyMark as Last Read|
|From: Julius Wong||10/18/2021 6:04:23 PM|
Alibaba reportedly set to premiere its own server chips
Oct. 18, 2021 10:19 AM ET Alibaba Group Holding Limited (BABA) ARMHF, AAPL, QCOM, NVDA By: Rex Crum, SA News Editor 57 Comments
maybefalse/iStock Unreleased via Getty Images
Chinese Internet giant Alibaba (NYSE: BABA) is reportedly close to expanding into semiconductors, and may introduce its first server chips as early as this week.
The Chinese financial news outlook Caixin reported that Alibaba ( BABA) has been developing server chips based on technology from British semiconductor company Arm Holdings ( ARMHF). Alibaba founded its own chip-making subsidiary in 2018, and is said to have been working on its own chips since 2019.
Alibaba will reportedly debut the server chips at a company conference this week.
Like many other Chinese companies, Alibaba ( BABA) has been investing in semiconductor design as a means of reducing expenses in chip manufacturing. Arm ( ARMHF) is known for licensing its technology to numerous tech companies such as Apple (NASDAQ: AAPL) and Qualcomm (NASDAQ: QCOM), and it is currently in the process of being acquired by Nvidia (NASDAQ: NVDA) for $54 billion. Nvidia has recently offered more concessions to European Union regulators in an effort to alleviate EU antitrust concerns about the proposed deal.
Last week, Alibaba ( BABA) Chairman Jack Ma gained attention by appearing publicly in Hong Kong for the first time since making critical comments about Chinese governmental business regulators in late 2020.
|RecommendKeepReplyMark as Last ReadRead Replies (1)|
|To: Julius Wong who wrote (789)||10/20/2021 7:10:06 AM|
|From: Glenn Petersen|
|Alibaba shares surge nearly 7% after Jack Ma appears in Europe and company releases new chip|
PUBLISHED WED, OCT 20 20212:55 AM EDT
UPDATED AN HOUR AGO
Arjun Kharpal @ARJUNKHARPAL
-- Alibaba’s Hong Kong shares rallied as much as 9% on Wednesday following reports of founder Jack Ma traveling to Europe and after the release of a new chip.
-- Two publications reported that Ma was in Spain but for different reasons.
-- Jack Ma has been largely out of the public view since October 2020 when he made comments that appeared to criticize Chinese regulators.
Jack Ma, founder of Alibaba Group, attends opening ceremony of the 3rd All-China Young Entrepreneurs Summit on September 25, 2020 in Fuzhou, Fujian Province of China. / Lyu Ming | China News Service via Getty Images
GUANGZHOU, China — Alibaba’s Hong Kong shares rallied as much as 9% on Wednesday following reports that its founder Jack Ma traveled to Europe and after the release of a new chip.
The stock pared some of those gains and closed 6.6% higher.
On Tuesday, Hong Kong-based publication East Week reported that Ma had traveled to Spain over the weekend with his billionaire friends and business partners for a sailing vacation. The report cited a source that could not be named due to confidentiality considerations.
The South China Morning Post, which is owned by Alibaba, later published an article reporting Ma was in Spain for an agriculture and technology study tour related to environmental issues.
Alibaba was not immediately available for comment when contacted by CNBC.
Ma’s whereabouts have been the topic of intense discussion since he went out of the public view last October after a speech in which he appeared to criticize Chinese regulators.
The initial public offering of Ma’s fintech giant Ant Group was subsequently suspended. Since then, China’s technology sector has also come under intense scrutiny from regulators.
China’s technology companies have seen billons of dollars wiped off of their valuations. Alibaba’s U.S.-listed shares are down more than 23% year-to-date.
“There is no doubt in my mind that Jack Ma no longer being missing would have at least a 10% impact on Alibaba’s share price, as that has long been one of the uncertainties many investors have had about the stock,” Tariq Dennison, wealth manager at Hong Kong-based GFM Asset Management, told CNBC.
In January, when Ma reappeared for the first time since the October speech, Alibaba’s shares surged on the day.
Alibaba also released some news related to its cloud business this week. On Tuesday, the company launched a new chip designed for servers in a bid to boost its cloud computing capabilities.
Cloud is seen as a key part of Alibaba’s future growth. It currently accounts for 8% of the company’s total revenue.
The e-commerce giant also said on Wednesday that it plans to open new data centers in South Korea and Thailand next year to continue overseas expansion of its cloud business.
“I see today’s move as just part of a broader recovery / reverse correction, where Alibaba shares are now 30% off their lows just earlier this month, but still 35% below their February highs,” Dennison said in an email.
Alibaba shares surge after Jack Ma appears in Europe, new chip release (cnbc.com)
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||10/31/2021 3:14:16 AM|
|After Alibaba’s $400 Billion Stock Selloff, Investors Hope the Worst Is Over|
They may have to wait a while for the former market darling to regain its glory
By Yifan Wang
Wall Street Journal
Oct. 29, 2021 5:30 am ET
New product launches could help offset expectations of slowing growth at Alibaba’s core e-commerce business. PHOTO: MARK SCHIEFELBEIN/ASSOCIATED PRESS
SINGAPORE—Investors are betting the worst is over for Alibaba Group Holding Ltd. BABA -2.86% after a punishing selloff that halved the market value of the Chinese e-commerce giant in less than a year.
They may have to wait a while, however, for the former market darling to regain its glory.
Alibaba, a bellwether for Chinese new-economy stocks, hit a record high a year ago this week, when its market capitalization topped $850 billion. That solidified its position as China’s most valuable listed company.
Days later, the blockbuster initial public offering of its financial-technology and digital payments affiliate Ant Group Co. was shelved. Alibaba’s shares began a long slide that slashed about $400 billion from the company’s market value. As Chinese regulators increased their scrutiny of more internet-technology companies, global investors including mutual funds managed by T. Rowe Price Group Inc. and Fidelity Investments cut their stakes in Alibaba, regulatory filings show.
The company’s shares rebounded partially this month, after a small publishing company chaired by Warren Buffett’s longtime partner Charlie Munger disclosed that it increased its stake in Alibaba. They jumped again after Jack Ma, Alibaba’s billionaire co-founder and the controlling shareholder of Ant, made a trip to Europe, indicating he was free to travel overseas and might no longer be under intense regulatory scrutiny at home.
Mr. Ma’s appearance in Europe “could inject a boost of confidence” for investors, said Oong Chun Sung, an analyst at UOB Kay Hian, a Singapore-based brokerage. The failed listing of Ant, which is a third owned by Alibaba and is restructuring into a financial-holding company, had a “very long-lasting impact on investor sentiment,” he said.
After its New York-listed American depositary receipts gained 15% this month, Alibaba’s market capitalization stands at about $460 billion. Investors were also encouraged by recent new product launches, including an advanced self-developed chip, from the company’s large and growing cloud-computing division. It provides data storage and processing technologies—as well as infrastructure for businesses—and is a significant driver of China’s digital economy.
That could help counter expectations of slowing growth at Alibaba’s core e-commerce business, which has been targeted by various regulatory actions over the past year.
In April, the company was fined a record $2.8 billion by China’s antitrust regulator, which said Alibaba abused its dominant market position in online retailing. The Hangzhou-based company had engaged in a practice known in the industry as “er xuan yi,” or “choose one out of two,” pressuring merchants to sell on its online platforms and not on those of its rivals.
Alibaba pledged to revamp its business practices and has since moved to gradually open up its e-commerce and digital-payments ecosystem to competitors. Growing competition is also eroding its market share as China’s e-commerce industry matures and consumer shopping preferences change.
“Alibaba’s business dynamic has undergone drastic changes,” said Bruce Liu, portfolio manager at Esoterica Capital, a New York-based asset-management company that sold its Alibaba shares last year after Ant’s IPO was scrapped. In light of China’s new era of tightened internet regulations, he predicted that it would be difficult for Alibaba’s valuation to return to peak levels soon.
Valuations for many internet businesses in China have soured since late 2020, as Beijing’s tightening regulatory grip has hurt investor appetite for the country’s stocks. But Alibaba suffered one of the biggest blows, due in part to its high visibility and liquidity in overseas markets.
Alibaba was one of the first targets of China’s tech crackdown that began last November. Later, in July, Beijing took more aggressive regulatory actions across more sectors and international investors rushed to cut their exposure to China.
The company’s market capitalization has also fallen significantly below that of its longtime rival and China’s other internet juggernaut, Tencent Holdings Ltd. , which earlier this year overtook Alibaba’s place as China’s most valuable listed company. The gap between the two has widened in recent months, and is now close to $140 billion.
Alibaba now trades at around 17 times expected earnings for the next 12 months, versus 24 times for Tencent, according to FactSet.
Other regulatory risks hover over China’s internet sector, including new data-security laws and new rules aimed at protecting the welfare and safety of gig economy workers.
Alibaba is also contending with weaker-than-expected growth in consumption across China. The country’s recent housing-market slowdown—as well as power-supply crunches—have hurt business activities and could weigh on consumers’ willingness to spend for the rest of the year, analysts at Citigroup said in a Sept. 29 report. They said the company may have difficulty achieving more than 30% revenue growth—a number Alibaba has guided analysts to—for the fiscal year that ends in March 2022.
Alibaba recently started promoting its coming Singles Day festival, an annual online shopping bonanza that has generated year after year of record sales on its platforms. Investors will be watching closely to see how this year’s event compares with 2020, when Alibaba said it generated the equivalent of $75 billion in sales.
In an October regulatory filing that contained a recent annual report for one of Putnam Investments’ emerging-markets funds, portfolio manager Brian Freiwald said Alibaba had been a laggard in terms of its stock performance. He expects the company’s core e-commerce business to grow in line with the market and said improving profitability at Alibaba’s other divisions should help the group produce more than 20% earnings growth.
“The stock has continued to trade at what we believe to be attractive valuations. We continue to like Alibaba,” he added.
—Serena Ng contributed to this article.
Write to Yifan Wang at email@example.com
Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the October 30, 2021, print edition as 'Investors Hope Alibaba’s Selloff Is Over.'
After Alibaba’s $400 Billion Stock Selloff, Investors Hope the Worst Is Over - WSJ
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||11/18/2021 11:38:43 AM|
|Alibaba shares drop 10% as its slashes guidance and earnings plunge on China’s slowdown|
PUBLISHED THU, NOV 18 20216:41 AM EST
UPDATED 8 MIN AGO
Arjun Kharpal @ARJUNKHARPAL
-- Alibaba has been a victim of China’s crackdown on its domestic technology industry which has seen a slew of new regulation brought in from antitrust to data protection.
-- Expectations were low coming into the fiscal second-quarter earnings report as a result.
-- Analysts expected it to be one of the most challenging quarters ever for the e-commerce giant.
GUANGZHOU, China — Alibaba on Thursday missed revenue and earnings expectations for the September quarter, as slowing economic growth in China weighed on results, adding to regulatory headwinds.
Here’s how Alibaba did in its fiscal second-quarter, versus Refinitiv consensus estimates:
Revenue: 200.69 billion yuan ($31.4 billion) vs. 204.93 billion yuan estimated, a 29% year-on-year rise.
EPS: 11.20 yuan vs. 12.36 yuan estimated, a 38% year-on-year decline.
The company also slashed its revenue guidance for its current fiscal year. It previously expected to bring in 930 billion yuan, which would have been about 29.5% year-on-year growth. But it now expects growth to be between 20% and 23% year-on-year.
Alibaba’s U.S.-listed shares fell 10% on Thursday.
China’s economy slowed down in the third quarter of the year, which has also hit consumption. Alibaba has also been on the receiving end of China’s crackdown on its domestic technology industry which has seen a slew of new regulation brought in from antitrust to data protection.
While China’s tech giants have grown largely unencumbered over the past few years, Beijing has looked to clean up some of the behaviors of its corporates. Alibaba was fined $2.8 billion in April as part of an anti-monopoly probe.
Expectations were low coming into the fiscal second-quarter earnings report as a result, with analysts expecting it to be one of the most challenging quarters ever for the Chinese e-commerce giant.
Alibaba’s core commerce business saw revenue grow 31% year-on-year to 171.17 billion yuan, missing expectations.
Customer management revenue, or CMR, is the single largest portion of Alibaba’s sales. CMR is revenue Alibaba gets from services such as marketing that the company offers to merchants on its Taobao and Tmall e-commerce platforms.
CMR grew just 3% year-on-year. Alibaba said this was due to slow growth of sales on its platform “that resulted from slowing market conditions and more players in the China e-commerce market.”
Alibaba has been facing intense competition from its rival JD.com but also newer players like Pinduoduo and even social media companies like TikTok-owner ByteDance.
The company is coming off the back of Singles Day, a huge shopping event in China where e-commerce platforms push heavy discounts and rack up billions of dollars of sales.
Alibaba raked in gross merchandise volume during the 11-day period totaling 540.3 billion yuan ($84.54 billion). Any revenue Alibaba gets from this event will not be reflected in the September quarter.
Investments weigh on profits
Alibaba said EBITDA (earnings before interest, taxes, depreciation and amortization), fell 27% year-over-year to 34.84 billion in the September quarter, largely on more investments into new businesses. EBITDA is one measure of profitability.
Earlier this year, management flagged that it would invest more in some of its fledgling business such as discount app Taobao Deals and its food delivery service Ele.me. Alibaba has also been trying to chase customers in smaller Chinese cities as well through some of these services.
“This quarter, 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,” CEO Daniel Zhang said in a statement.
Cloud computing, another area closely watched by investors, grew 33% year-on-year to 20 billion yuan. Adjusted EBITA for the segment was 396 million yuan versus a 567 million yuan loss in the same period last year.
Alibaba earnings fiscal Q2: Revenue misses, earnings plunge (cnbc.com)
|RecommendKeepReplyMark as Last Read|