Alibaba indifferently watched TikTok and Tencent go to war?

While TikTok and Tencent have continuously made moves to spearhead the antitrust legal battle, Alibaba unexpectedly released new financial reports.

After the ups and downs of 2020 and a series of upheavals brought by Ant Group, where will Alibaba go when the first signs in the antitrust war in China have begun to take place?

According to the financial report, Alibaba posted operating income of 221.08 billion yuan this quarter, up 36.9 percent year-on-year, exceeding analyst expectations of 214.38 billion yuan; Non-GAAP’s net profit was 59,207 billion yuan and adjusted EBITA was 61,253 billion yuan, adjusted EBITA rate was 28 percent, exceeding market expectations.

In terms of revenue structure, Alibaba’s core business this quarter reached 195.54 billion yuan, a significant increase of 38.2% year-on-year, accounting for 89% of total revenue.

This is mainly due to the expansion of the Double 11 sales cycle this year and the proliferation of marketing activities. China’s retail sales, including Amoy, Hema and Yintai e-commerce, grew strongly, reaching 153.68 billion yuan, up 39% year-on-year.

On the other hand, Alibaba completed its merger acquisition of Sun Art Retail since October, which has significantly improved the company’s revenue. With the growth in direct sales from Tmall, Hema and Sun Art Retail, the share of Alibaba’s direct sales continues to increase.

However, the proportion of proprietary businesses continued to increase, causing gross profit to decline. In terms of profitability, Alibaba posted a gross profit of 99.82 billion yuan this quarter, with a gross margin of 45.1%, a slight decrease from 47.8% for the same period last year. Adjusted EBITA in the quarter was CNY 61.25 billion and adjusted EBITA rate was 27.7%, down from the same period last year.

Local life business company, mainly, has mediocre operating performance, with operating income of 8.35 billion yuan, only 10% increase over the same period last year, low much more than the growth rate of the broader market.

Although Alibaba has released its stable financial report, the stock price is still trending down during the trading day, and ultimately closed at 254.5 USD, down 3.85%. Affected by the postponement of the IPO and Ant Group’s antitrust investigation, Ali’s share price corrected from its high of $ 319.32 on Nov. 27 to its current $ 260 level and market value. market decreased from over 850 billion USD to now 700 billion USD.

Looking back at Tencent, over the past two months, its share price tended to go up, with an increase of more than 20% (in terms of Tencent’s share price at the end of October 2020) and market value nearing. 900 billion USD, 200 billion USD higher than Alibaba.

For two companies with a market capitalization of more than $ 700 billion, the periodic highs and lows do not reflect the pros and cons at the operational level, but to a large extent it may reflect the The capital market attitudes toward the two firms.

In the past three months, stocks in the US and Hong Kong have both escaped a bull cycle, but Alibaba’s share price continues to decline in the opposite direction. In fact, concerns over policy uncertainty have left the capital market more negative on Alibaba and has a domino effect.

In addition to policy risks, Alibaba’s ability to innovate and grow rapidly at the business level also affects capital market attitudes to a great extent. Many of Alibaba’s businesses face competition.

On the other hand, Tencent with its core gaming business, despite its old rivals NetEase, Perfect World and new rival ByteDance, it still does not fundamentally pose a direct threat to Tencent’s position.

From an outsider’s perspective, Alibaba is actually facing the pressure from market sentiment and business competition at this stage, but its underlying market remains stable.

However, to say that Alibaba is indifferent to the antitrust battle between TikTok and Tencent may be inaccurate. Because Jack Ma and Alibaba together with the new member companies are the first target that Chinese officials target in antitrust investigations.

The “war” between TikTok and Tencent is expected to be only the initial moves to initiate a series of next campaigns by Chinese technology firms. And this time, Jack Ma and Alibaba Group are not sure to be able to save themselves …

Phong Vu

TikTok & quot; come back & quot;  with Tencent

TikTok “turns” with Tencent

The first antitrust shot between the two leading platforms in China broke out, and both TikTok and Tencent are ready for a new legal battle.


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