Photo by PROITU Pictures/Flickr
Overnight, Alibaba Group had lost $31bn off the company’s market cap folowing its announcement regarding a decline in its margins.
The revenues of Alibaba rose by 56 percent year-on-year to $12.8bn (£9bn) during the final quarter of last year. The e-commerce giant increased the company’s growth forecast for the year ending March to between 55 percent and 56 percent.
However, operating margin dropped to 31 percent, down from the 39 percent during the same quarter a year earlier.
The shares of the group fell six percent on the news, its sharpest decline since June 2016.
The margins of Alibaba have been squeezed by the company’s investments in digital media and physical assets.
Recently, the group announced that it will take a 33 percent stake in Ant Financial, a payment affiliate, which is seen as a step towards an anticipated initial public offering (IPO) by Ant, which was valued at $60bn last 2016. Ant is the operator of a popular online payment system called Alipay. The stake will be a significant investment for Alibaba as it attempts to fend off its rivals in the e-commerce business.
The chief executive of Alibaba Group, Daniel Zhang, stated: “Alibaba had another greater quarter driven by the continued strength of the Chinese consumer and the wide and innovative range of services we provide for merchants and consumers.”