Alibaba posts surprise loss as China Covid curbs take a toll

Bloomberg

Alibaba Group Holding Ltd. reported a surprise loss after quarterly revenue barely grew, as China’s rigid Covid controls continue to sap consumer sentiment. Revenue rose a slightly less-than-expected 3% to 207.2 billion yuan ($29 billion) in the September quarter, versus the 209 billion yuan average projection. It reported a net loss of 20.6 billion yuan versus estimates for a profit of 18.8 billion yuan, after adjusting for market investments. The company also green-lit a $15 billion expansion to its buyback program.
Alibaba is focusing on shoring up its bottom line as Covid policies and antitrust measures imposed during last year’s tech sector crackdown sap growth. This month, the company failed to disclose full sales results for its signature Singles’ Day shopping festival for the first time in 14 years, suggesting a disappointing turnout for its most important annual event. And Chinese retail sales contracted 0.5% in October — the first decline since May and worse than expectations for marginal growth.
Still, investors point to signs Xi Jinping’s administration is retreating from its Covid Zero framework — easing the logistics tangles that have weighed on Alibaba’s business — and growing supportive of tech firms.
Chinese tech shares recovered some of their losses this month, after the Communist Party began pulling back from its Covid-Zero playbook and offered more incentives to the Biden administration to work together. Xi’s shift on those fronts, coupled with perceptions of a renewed focus on reviving the world’s No. 2 economy, is spurring speculation that Beijing will begin to unshackle the private sector.