Alibaba stock tumbled Thursday as the e-commerce giant reported quarterly results that missed expectations due to a regulatory crackdown and slowing consumption. Alibaba (BABA) reported earnings before the market open.
The company reported adjusted earnings of $1.74 a share on revenue of $31.1 billion. Analysts expected Alibaba to report earnings of $1.93 a share on revenue of $32 billion. Alibaba also warned of slower growth. Results were for its fiscal second quarter ended Sept. 30.
Alibaba stock dropped 9.5% to 146.45 during morning trading on the stock market today, as other China stocks fell across the board
The company also said that sales for its current fiscal year should rise between 20% and 23% from a year ago. Analysts were predicting growth of nearly 28%.
China stocks dropped for the second day in a row, on lower-than-expected quarterly results. Baidu (BIDU) and Bilibili (BILI) reported quarterly results early Wednesday that failed to ease concerns about the impact of harsh regulations handed down by government officials over the past year.
JD.com (JD), however, appears to have weathered the shift. It reported third-quarter results early Thursday that topped expectations. JD stock jumped 6.9% to 88.90.
China Stocks Get Hammered
Baidu, which dropped 5.5% on Wednesday, fell another 4% Thursday to 155.10. Bilibili stock plunged 9% Wednesday and another 16.2% Thursday to 67.86.
Also on Thursday, Pinduoduo (PDD) fell 5.4% to 85.10 while Tencent Holdings (TCEHY) edged down 2.8% to 62.35.
Tencent, among the largest China internet companies, reported earnings last week.
Tencent reported a 3% increase in profit, its slowest growth in two years. It’s been hit on multiple fronts by new regulations, including limits on the amount of time children can spend playing video games.
Uncertainty About What’s To Come
The regulatory tightening in China started with a trickle late last year, but intensified in terms of its duration, intensity and scope. Moreover, China leaders continue to offer no sign of what’s to come.
Regulations targeting specific sectors such as e-commerce platforms, financial technology, social media and online education have gouged the market caps of many China stocks, in some cases cutting them by more than half.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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