The company is expected to register a 33% jump in revenue in the quarter ended in December compared to the previous year, according to analysts surveyed by Refinitiv.
But strong revenue may not be enough to allay investors’ concerns, who have been shaken by concerns about how hard the Chinese authorities can attack Jack Ma’s technology empire.
Ma, who was a co-founder of Alibaba for more than two decades, transformed the company into one of China’s most powerful technology titans. It generated nearly $ 80 billion in revenue in the fiscal year ended last March and has a market capitalization of more than $ 700 billion, making it one of the most valuable technology companies in the world.
But Beijing is increasingly concerned about the influence that large private technology companies have on the financial sector and other sensitive areas, and how ingrained they have become in everyday life in China through digital payment applications and other services. .
Since then, the scenario has worsened for Alibaba and other Chinese technology companies. In December, President Xi Jinping considered efforts to strengthen anti-monopoly rules against online platforms one of the most important goals for 2021, according to state news agency Xinhua. And regulators announced an antitrust investigation into Alibaba on Christmas Eve.
Yi Gang, the governor of the People’s Bank of China, said last week at a Davos virtual forum that regulators’ involvement in the company is ongoing.
The problems faced by Alibaba and Ant affected the share price of the former. New York-listed Alibaba shares have fallen about 17% since the peak in late October, a drop that wiped out more than $ 140 billion from its market capitalization.
Some analysts suspect that Alibaba may survive China’s relatively intact regulatory scrutiny. Martin Chorzempa, a senior researcher at the Peterson Institute for International Economics, said Chinese officials probably want to be careful “not to kill the goose that laid the golden eggs” after all.
But experts warn that the days of uncontrolled growth are likely to be over.
“Of course [Beijing] will narrow the scope of managerial independence through regulation and informal “guidance” for the [Alibaba] conglomerate, “said Doug Fuller, associate professor at City University of Hong Kong who studies technological development in Asia.
As for the Ant Group, the company will probably still be allowed to go ahead with an IPO once regulators have finished questioning the company about antitrust concerns. and consumer privacy issues, according to Kevin Kwek, managing director and senior analyst at Alliance Bernstein.
But if you are forced to make any drastic changes, it can hurt Ant’s rating when you are eventually able to list. Before the IPO opened, Ant was expected to become the largest initial public offering ever, with a $ 34 billion share sale.
“You can bet Ant’s best heads [are] working on the challenges as we speak, “said Kwek.” The question is how much they end up ‘giving up’ and what it can mean for assessments. “