Alibaba Records Over 1 Trillion Won Operating Loss Despite Strong Sales... Due to Penalty Fee

First Operating Loss Recorded Since Listing

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Alibaba, the Chinese e-commerce company founded by Ma Yun, recorded an operating loss in the trillion-won range despite strong performance. This is the first operating loss since its listing, due to an antitrust fine imposed by authorities.

According to CNBC on the 13th (local time), Alibaba's first-quarter revenue was 187.4 billion yuan (approximately 32.9 trillion won), a 64% increase compared to the same period last year. This exceeded the market forecast of 180.4 billion yuan.

However, Alibaba's profitability worsened due to a large antitrust penalty. Alibaba posted an operating loss of 7.66 billion yuan (approximately 1.34 trillion won) in the first quarter. Net loss for the same period was recorded at 5.47 billion yuan.

Despite strong performance, the large loss was due to intensified pressure from the Chinese government, starting with the collapse of Ant Group's $34.5 billion IPO on the Chinese stock market last year.

Alibaba Group was significantly affected by the payment of an antitrust fine of 18.228 billion yuan (approximately 3.2 trillion won) imposed by Chinese authorities.

This operating loss is the first since Alibaba went public.

The market evaluated that excluding the antitrust fine factor, Alibaba achieved solid results in the first quarter.

In the fiscal year from April last year to March this year, Alibaba platform's consumers reached 811 million, an increase of about 85 million compared to the previous fiscal year.

This number is higher than Pinduoduo's 788 million consumers, which is rapidly catching up to Alibaba.

Furthermore, if the penalty had not been imposed, Alibaba is estimated to have recorded an operating profit of 10.56 billion yuan, a 48% surge compared to the same period last year.

Sales in the cloud sector, regarded as Alibaba's next-generation growth engine, also increased by 37% year-on-year to 16.76 billion yuan (approximately 2.9422 trillion won), about a 50% increase compared to the previous year.

Alibaba forecasted sales of 930 billion yuan this year, an increase of about 29.65% compared to the previous year.