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Alibaba Stock Falls After Earnings Beat as Beijing Crackdown Reports Rattle China Markets

'We believe in the growth of the Chinese economy and long-term value creation of Alibaba,' says CEO David Zhang.

Alibaba Group Holding Limited  (BABA) - Get Free Report posted better-than-expected first quarter earnings, sending its U.S. shares higher in pre-market trading. 

Alibaba said diluted non-GAAP diluted earnings for its U.S.-listed shares for the three months ending in June, the group's fiscal first quarter, were pegged at $2.57 per share, a 22.4% increase from the same period last year.  

Group revenues, Alibaba said, rose 34% to 205.7 billion Chinese yuan, or $31.8 billion, compared to analysts' forecasts of a 209.9 billion tally.  

“Alibaba started the new fiscal year by delivering a healthy quarter. For the June quarter, global annual active consumers across the Alibaba Ecosystem reached 1.18 billion, an increase of 45 million from the March quarter, which includes 912 million consumers in China. Over more than twenty years of growth, we have developed a company that spans across both consumer and industrial Internet, with multiple engines driving our long-term growth,” said CEO Daniel Zhang. “We believe in the growth of the Chinese economy and long-term value creation of Alibaba, and we will continue to strengthen our technology advantage in improving the consumer experience and helping our enterprise customers to accomplish successful digital transformations.”  

Alibaba's U.S.-listed shares were marked 3.8% lower in early trading immediately following the earnings release to change hands at $192.53 each.

Digital media and entertainment revenues, which includes Alibaba's online gaming operations, came in at 8.073 billion Chinese yuan, a 25.6% increase from the same period last year. 

Earlier Tuesday, the state-backed Economic Information Daily newspaper Tuesday described online gaming as "spiritual opium", and called for stricter curbs on the sector, sparking concerns over another crackdown from regulators in Beijing.

The call sent shares in Tencent Holdings undefined 10% lower on the session, with ripple effects seen in stocks around the region.

In the U.S., Take-Two Interactive  (TTWO) - Get Free Report was marked 4.1% lower at $166.00 each, while Activision Blizzard  (ATVI) - Get Free Report fell 1.1% and Electronic Arts  (EA) - Get Free Report was down 1%.