Alibaba Group Holding Ltd (BABA)’s Shares Tank Post Quarterly Results, Political Scrutiny Raises Difficulties for Ecommerce Company

Alibaba Group Holding Ltd (NYSE:BABA)

The shares of the world’s largest ecommerce company, Alibaba Group Holding Ltd (NYSE:BABA), slumped in excess of 9 percent after announcing its December quarter results. The holiday quarter performance could not impress market experts and the ecommerce company had some trouble with Chinese regulators in the last few months.

The first reason bringing down its shares was the less-than-expected third quarter results for the Chinese ecommerce company. Alibaba reported quarterly revenues of $4.21 billion against the market expectations of $4.45 billion, although the revenue improved 40 percent from the previous year quarter. However, the earnings of Alibaba Group Holding Ltd (NYSE:BABA) fell up to 28 percent to $964 million. It is important to consider that mobile revenue contributed $1.03 billion in the overall revenues.

Alibaba improved its EBITDA margin to 58 percent in this quarter against 50.5 percent EBITDA margin in the September quarter. The ecommerce company witnessed 448 percent improvement in its mobile revenue year-over-year. The CEO of Alibaba Group Holding Ltd (NYSE:BABA), Jack Ma, said that the company is in its infant stage and will witness growth in upcoming years.

Alibaba Group Holding Ltd (NYSE:BABA)

Another problem stemming up for the ecommerce company is its regular barbs with the Chinese government body, State Administration for Industry and Commerce (SAIC), questioning its efforts in controlling the suppliers offering counterfeit products over the ecommerce platform of Alibaba.

Scott Devitt and George Askew, Stifel analysts, mentioned,

“Alibaba does outline anti-counterfeit measures in its filings, but the SAIC report puts the effectiveness of these measures into question. The perception issue may persist.”

However, Alibaba Group Holding Ltd (NYSE:BABA) is not in the mood to let the things get over its head and the company is all set to file an official complaint against the agency. In addition to it, the ecommerce giant is ready to accuse the head of SAIC for “procedural misconduct.”

This article has been written by Prakash Pandey.

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