Alibaba T3 benefits: company prepares to face investors as crackdown on China intensifies

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According to analysts surveyed by Refinitiv, the company is expected to report a 33% increase in revenue for the quarter ended December compared to the previous year.

But perhaps strong revenues would not be enough to calm the concerns of investors, who have been worried about the concern that the Chinese authorities may fall on Jack Ma’s technological empire.

Ma, who co-founded Alibaba more than two decades ago, made the company one of China’s most powerful technology titans. It generated nearly $ 80 billion in revenue during the fiscal year that ended last March and has a market capitalization of more than $ 700 billion, making it one of the most valuable technology companies in the world.

But Beijing has become increasingly concerned about the influence of large private technology companies on the financial industry and other sensitive areas and on their rooting in everyday life in China through digital payment applications and other services.

Alibaba faces one
Last November, Alibaba’s shares fell even as the company’s profits exceeded estimates, as it reported results just after regulators left a long-awaited IPO of its financial subsidiary, Ant Group.

Since then, the picture has worsened for Alibaba and other Chinese technology companies. According to the Xinhua State News Agency, President Xi Jinping said in December that efforts to strengthen antitrust rules against online platforms were one of the most important goals for 2021. And regulators announced an antitrust investigation into Alibaba on Christmas Eve.

Meanwhile, Ant Group was asked to review its online financial business after authorities criticized it for withdrawing rivals from the market, harming consumer rights and taking advantage of regulatory loopholes to make its own profits.

Yi Gang, the governor of the People’s Bank of China, said last week at a virtual forum in Davos that regulators’ involvement in the venture continues.

Ma, co-founder of Alibaba, who has retired from the company but still remains a reference figure, has largely remained out of sight of all this. He disappeared from public view for months before leaving briefly in January to speak with teachers at a philanthropic event.

The problems facing Alibaba and Ant have affected the share price of the former. Alibaba’s New York-listed shares have fallen about 17% since reaching a peak in late October, a drop that has wiped out more than $ 140 billion from its market capitalization.

Some analysts suspect that Alibaba may survive China’s regulatory scrutiny relatively intact. Martin Chorzempa, a senior member of the Peterson Institute for International Economics, said the Chinese authorities are likely to want to be careful “after not killing the goose that lays the golden eggs.”

But experts warn that the days of uncontrolled growth are probably over.

“It is clear that [Beijing] will reduce the scope of managerial independence through regulation and informal “orientation” towards [Alibaba] conglomerate, ”said Doug Fuller, an associate professor at City University of Hong Kong who studies technology development in Asia.

As for the Ant group, the company is likely to be allowed to go ahead with a IPO when regulators have finished providing the company for antitrust issues. and consumer privacy issues, according to Kevin Kwek, CEO and senior analyst at Alliance Bernstein.

But if he is forced to make drastic changes, this could hurt Ant’s valuation when he can finally list it. Before the IPO was withdrawn, Ant was expected to become the largest initial public offering with a $ 34 billion share sale.

“You can bet on the best minds in Ant [are] working on challenges as we speak, “Kwek said.” The question is how much they end up “giving up” and what that could mean for valuations. “

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