Strong results have been posted by Alibaba, the Chinese ecommerce giant, for the last quarter of 2020. Founded by Jack Ma, the company saw its revenues increase by 37% against the same quarter back in 2019 to reach a value of 221 billion yuan, which is the equivalent of $34.2 billion. However, the results come amidst increasing uncertainty about the Ant Group, the company’s financial affiliate. Alibaba said that it hadn’t been able to do a fair assessment of the impact of the stalled market launch of the Ant Group. Daniel Zhang, the chief executive of Alibaba, said that the strong results of the company were due to the economic growth in China.
Even though the progress was rather sluggish in the world’s second largest economy as compared to previous years, but it was the only major economy to experience growth amidst the COVID-19 pandemic. The company’s revenues were also boosted by the strong results for Singles Day, which is the company’s biggest sale of the year. However, analysts said that a lot of people were not looking at the business and wondering where the next wave of growth will take place. There was a 50% growth in the cloud computing revenues of the company in the same quarter last year, as it hit $2.5 billion and posted a profit for the very first time.
But, it is not all good news for the ecommerce giant as Ant Group, which is its financial technology (fintech) affiliate, is still under intense scrutiny of regulators in China. Ant Group had been scheduled for a launch in November and was expected to be the biggest stock market debut that would help raise $37 billion. But, Mr. Zhang said that the market launch for the affiliate was on hold indefinitely. In a statement, the company said that the Initial Public Offering and business prospects of the Ant Group were subject to some major uncertainties.
According to analysts, this could have a significant impact on Alibaba and could also result in an investigation into the company’s alleged monopolistic practices, which had been announced in December by the regulators. Analysts said that if the Chinese government is going to take a conservative approach where its larger tech businesses are concerned and crackdown on entrepreneurs, it could end up affecting investor confidence and provide an opening to others for exploitation. The Ant Group is the biggest payments provider in China, as they have more than 730 million monthly users on AliPay, its digital payments service.
There is also a consumer lending division of the company that takes fees from banks for matching borrowers to lending services. The earnings call for the December 2020 quarter results should have been an opportunity for Alibaba’s CEO to talk about the stellar results of the firm. It appears that even a pandemic cannot keep the company down, but the Ant Group’s IPO was a dark cloud after it was suspended last year and he had to discuss that after discussing the increase in revenue and crediting the country’s economy for it.
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