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Alibaba Tops Q3 Earnings Forecast, Notes 'Substantial Uncertainties' For Ant Group

Alibaba said the business prospects and IPO plans for its Ant Group subsidiary are "subject to substantial uncertainties" thanks to "significant changes in the Fintech regulatory environment in China."

Alibaba Group Holding Co. Ltd.  (BABA) - Get Alibaba Group Holding Limited American Depositary Shares each representing eight Report posted stronger-than-expected third quarter earnings Tuesday thanks to a record Single's Day shopping even in November, but cautioned that the delayed IPO of Ant Group is still subject to "substantial uncertainties". 

Alibaba said diluted non-GAAP diluted earnings for the three months ending in December, the group's fiscal third quarter, were pegged at $4.42 per share, well ahead of the Refinitiv-collected forecast of $3.23 pre share. Group revenues, Alibaba said, rose 37% to 221.08 billion Chinese yuan, or $34.25 billion. That also topped analysts' forecasts of a $33.04 billion tally.

“China was the only major economy to achieve positive GDP growth last year. Thanks to the rapid recovery of China’s economy, Alibaba had another very healthy quarter,” said CEO Daniel Zhang. “We achieved another successful 11.11 Global Shopping Festival by stimulating consumption, satisfying consumer demands and supporting the business recovery of merchants in response to the impact of the pandemic."

"Our cloud computing business continues to expand market leadership and show strong growth, reflecting the massive potential of China’s nascent cloud computing market as well as our years of investment in technology," he added. "Looking ahead, we are confident that we will continue to create value for our customers, lead with innovation and make our contributions to society.”  

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Alibaba's U.S.-listed shares were marked 1% lower in pre-market trading following the earnings release to change hands at $262.25 each.

Alibaba's Singles Day shopping event in November topped $75 billion in gross merchandise value, a staggering total that dwarfs the record $10.4 billion spent during Amazon Inc.'s  (AMZN) - Get Inc. Report two-day Prime Day event last month.

In late December, however, Chinese regulators set their sights on Asia's most valuable tech company in their latest attack on the financial empire of billionaire Jack Ma.

China's State Administration for Market Regulation launched its probe into Alibaba, and demanded a meeting with officials from its affiliate Ant Group Co., amid a broader push to tackle anticompetitive practices in internet commerce, including the alleged pressuring of merchants to list their goods on a single online platform.

The investigation follows last month's dramatic suspension of the planned $37 billion IPO of Ant Group and the summoning of billionaire Ma by government officials, as well as the People's Bank of China, to "provide views regarding the health and stability of the financial sector".