Ant Group’s IPO would have catapulted Jack Ma to the top of Asia’s rich list.
Chinese e-commerce giant Alibaba beat analyst estimates of its third-quarter sales as online spending surged and said it was assessing the suspension of its affiliate Ant Group’s listing.
Alibaba’s revenue rose 30 percent to 155.06 billion yuan ($23.43bn) in the quarter that ended on September 30, compared with estimates of 154.74 billion yuan ($23.38bn), according to IBES data from Refinitiv.
Revenue at Alibaba’s cloud-computing business, a focus area for the company, jumped 60 percent to 14.9 billion yuan ($2.25bn), while sales from its core e-commerce business rose 29 percent to 130.92 billion yuan ($19.79bn) in the reported quarter.
Net income fell 63 percent to 26.52 billion yuan ($4bn), as Alibaba had booked a one-off gain last year from its 33 percent stake in Ant Group.
Alibaba benefitted from stronger sales in its home market, which led the global recovery from COVID-19.
China’s gross domestic product (GDP) grew 4.9 percent in the last quarter, making China the world’s only significant growth engine.
The e-commerce titan is banking on more than a quarter of a million brands, increased discounting and technologies such as live-streamed selling to draw consumers to its annual blockbuster Single’s Day shopping festival, which culminates next week.
“The performance of Singles’ Day might be a more important benchmark to look at, rather than the third-quarter result,” Steven Zhu, an analyst with Pacific Epoch, told the Bloomberg news agency. “E-commerce is the only sector that will actually benefit from coronavirus, simply due to the fact that a lot of normal consumption is shifted from offline to online.”
Alibaba’s Hong Kong-listed shares, which have gained more than 38 percent so far this year making it one of the world’s most valuable companies, were down 2.4 percent in early trade.
China’s surprise suspension on Tuesday of the $37bn initial public offering of Alibaba’s payment platform was seen by some analysts and investors as an attempt by Beijing to cut founder Jack Ma and his financial services empire down to size.
Beijing’s move thwarted the world’s largest IPO with just days to go, in a dramatic move that left investors and bankers scrambling for answers.
Ant said that its listing had been suspended by the Shanghai stock exchange following a meeting that its billionaire founder Jack Ma and top executives held with Chinese financial regulators. It also froze the Hong Kong leg of the dual listing.
Alibaba Chief Executive Daniel Zhang said during an earnings call that Alibaba is “actively evaluating” the effect of the Ant Group IPO’s suspension on its business and will “take appropriate measures accordingly”.
Ant Group said separately it would decide whether to restart its IPO after fully reviewing and evaluating relevant measures.
President Xi Jinping’s government is tightening controls on Ant and other fast-growing financial conglomerates after years of allowing them to operate without capital and leverage requirements imposed on banks.
But the halt also came after Ma blasted China’s financial system and questioned global regulatory models at a high-profile conference last month, calling banks “pawn shops”. China is still a “youth” and needs more innovation to build an ecosystem for the healthy development of the local industry, Ma said.
Alibaba’s results also coincided with markets awaiting the outcome of the United States presidential election results, with Democrat Joe Biden edging closer to victory.
Under President Donald Trump, the world’s top two economies have clashed over trade, forcing some Chinese companies to put off US IPOs and list on exchanges close to home.