Alibaba Reports First-Ever Loss Since IPO; Stock Falls 6%

Chinese e-commerce and cloud computing powerhouse Alibaba (BABA) reported Fiscal 2021 fourth-quarter results that showed its first-ever operating loss since its IPO in 2014. Alibaba stock fell 6.29% on Thursday.

Revenue came in at 187.4 billion yuan, increasing 64% year-over-year and beating the consensus estimate of 179.9 billion yuan. The company’s flagship commerce business continued to be a bright spot with the pandemic accelerating the shift to online shopping. Alibaba finished the year with 811 million active shoppers on its China retail marketplaces, marking an increase of 32 million from a year ago.

Although business appeared to be booming, Alibaba reported an operating loss of 7.7 billion yuan, marking its first quarterly loss as a public company. A major contributor to the loss was the 18.2 billion yuan antitrust fine that Chinese regulators slapped on the company in April. Without the fine, it would have reported an operating profit of 10.6 billion yuan.

“We remain very excited about the growth of China’s consumption economy, which is benefiting from the acceleration of digitalization in all aspects of life and work,” commented Alibaba CEO Daniel Zhang.

Alibaba closed the quarter with a cash balance of 473.6 billion yuan. It plans to ramp up spending in Fiscal Year 2022 as it pursues new growth opportunities. It forecast revenue for the year at 930 billion yuan, indicating nearly 30% growth. (See Alibaba stock analysis on TipRanks).

Following the results, Stifel analyst Scott Devitt maintained a Buy rating but lowered the price target to $280 from $290 on Alibaba stock. Devitt’s new price target implies 35.87% upside potential to current levels.

“We are adjusting our estimates to reflect elevated investment in FY:22 as the company reinvests incremental profit to support long term growth,” noted Devitt.

Consensus among analysts on Wall Street is a Strong Buy based on 22 Buy and 1 Hold ratings. The average analyst price target of $307.96 implies 49.4% upside potential to current levels.

BABA scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock will likely outperform the market.