Alibaba suffered its first operating loss since going public due to China Anti-Monopoly fine

China's largest e-commerce platform, Alibaba Group recorded its first quarterly operating loss since going public in 2014, owing to a record anti-monopoly fine imposed by the country's market regulator.

Even as the company predicted strong 2022 sales, its US-listed shares dropped nearly 3% in choppy trading, betting that the pandemic-driven transition to online shopping will remain resilient.

A regulatory crackdown in China, however, cast a pall over the outlook, leading to the cancellation of Ant Group's $37 billion (roughly Rs. 2,77,000 crores) IPO and a $2.8 billion (roughly Rs. 20,540 crores) fine in April for anti-competitive market practises.

The fine resulted in an operating loss of CNY 7.66 billion (roughly Rs. 8,720 crores) in the fourth quarter ended March 31.

In an earnings call, Chief Executive Daniel Zhang said, "The Penalty Decision inspired us to focus on the relationship between a platform economy and society, as well as our social obligations and commitments."

Alibaba expects annual sales of CNY 930 billion (roughly Rs. 10,59,000 crores) for the fiscal year ending March 2022, up from CNY 928.25 billion previously expected (roughly Rs. 10,57,000 crores).

In the fourth quarter, core commerce sales increased by 72% to CNY 161.37 billion (roughly Rs. 1,83,800 crores). However, growth at its cloud storage unit slowed to 37% from 58% a year ago, to CNY 16.8 billion (roughly Rs. 19,140 crores), the slowest since at least 2016.

It was due to a top customer with a "significant footprint outside of China'' ceasing operations for "non-product related purposes," according to Alibaba. In the fourth quarter, total sales increased to CNY 187.4 billion (roughly Rs. 2,13,420 crores), exceeding the Refinitiv estimate of CNY 180.41 billion (roughly Rs. 2,05,500 crores).

Alibaba's stock has dropped more than 30% after reaching a new high in late October, when founder Jack Ma gave a speech in Shanghai criticising China's financial regulators.

According to Brock Silvers, chief investment officer at Hong Kong-based Adamas Asset Management, the falling stock price reflects investor concerns about regulation.