Alibaba stock plummeted Thursday as the Chinese e-commerce giant's quarterly earnings fell well short of estimates and the firm lowered its full-year revenue forecast.
The Chinese e-commerce giant's stock was down 11% to $143.59 after the company missed both the top and bottom lines in its most recent quarterly earnings.
The company's shares have retreated almost 35% this year as a result of Beijing's wide clampdown on Chinese tech companies. Alibaba's Hong Kong-listed shares were also down 5.3% Thursday ahead of the company's earnings report.
Alibaba has reported sales of 201 billion yuan ($31.4 billion), down from the projected 205 billion yuan but still up nearly 30% year on year. The company announced earnings per share of 11.20 yuan, which was lower than the consensus forecast of 12.36 yuan and represented a 38% year-over-year fall.
Alibaba's chairman and Chief Executive Director Daniel Zhang mentioned "economic challenges compounded by rising market rivalry" as a factor harming the company's main commerce sector in China during a conference call with analysts.
Alibaba's cloud revenue increased 34% year over year, slightly exceeding estimates.
Additionally, the company trimmed its full-year sales forecast. Alibaba forecasted revenues of more than 930 billion Chinese yuan ($146 billion) for the fiscal year ending March 2022 in May, representing roughly 30% year-over-year increase. It has now slashed that amount significantly, forecasting sales growth of 20% to 23%.
Alibaba is experiencing a decline in profitability compared to last year. Margins in the quarter, as defined by the company's adjusted earnings metric, fell by over half year over year-from 27% to 14%.
Profitability pressure was particularly pronounced in Alibaba's core commerce division, where margins fell from 35% to 19%. The company attributed this to strategic investments and incorporation of an acquisition into its financial reporting.
"This quarter, Alibaba made significant investments in our three strategic pillars of domestic consumption, globalization, and cloud computing in order to lay the groundwork for our long-term aim of sustainable growth in the future," Zhang stated in the company's quarterly report.
Alibaba announced last week that it had surpassed its previous sales record for the two-week-long Singles Day event, China's equivalent of Black Friday and the world's biggest shopping binge.
Alibaba's results are carefully scrutinized on their own merits as one of the world's top technological corporations and a Chinese business heavyweight.
However, they provide a crucial indicator of consumer mood in China and, consequently, the strength of the world's second-largest economy.
