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Alibaba seeks to reassure investors as Beijing's business crackdown grows

Alibaba seeks to reassure investors as Beijing's business crackdown grows

Posted: Aug 3, 2021 8:21 AM
Updated: Aug 3, 2021 8:21 AM

Alibaba sought to reassure investors by unveiling a 50% increase in its share repurchase plans Tuesday while reporting somewhat mixed results.

The Chinese online shopping behemoth has been slammed in recent months by Beijing's widening crackdown on private business, stoking concerns about its future. On Tuesday, it reported a drop in earnings despite an increase in sales.

Net income of 45.1 billion yuan, or about $7 billion, slipped from 47.6 billion yuan it earned a year earlier. But its adjusted earnings were a bit better than recently lowered estimates from analysts. Alibaba's revenue of 205.7 billion yen, or about $32 billion, while up 34% from a year ago, fell a bit short of expectations. Analysts surveyed by Refinitiv had forecast revenue would reach 209 billion yuan.

The company tried to assure investors by announcing it will now repurchase $15 billion in shares through next year, up from a $10 billion repurchase plan that had been in place. It also disclosed it had repurchased $3.7 billion worth of its US-traded shares since April.

Alibaba's main business — e-commerce — has held up well during the coronavirus pandemic, soaring as people turn to online shopping to buy things without leaving their homes. The company has also benefited from continued economic strength in China, which averted the recession that pummeled most of the globe last year.

But the prospect of further scrutiny from Chinese regulators looms large.

In May, Alibaba said it posted a loss of about $1.2 billion for its first quarter — a hit that was mainly due to a record $2.8 billion fine that Beijing imposed on the company after accusing it of behaving like a monopoly.

Joe Tsai, Alibaba Group's co-founder and executive vice chairman, played down concerns when the fine was announced, saying that the company was "pleased" that it could "put this matter behind us."

"With this penalty decision, we've received a good guidance on some of the specific issues under the anti-competitive law," he told investors on a call at the time.

Beijing's broader clampdown hasn't let up. Alibaba's New York-listed shares plunged nearly 14% during July as investors grew nervous about Chinese tech, including the ability of such companies to trade outside of China. (Alibaba also trades in Hong Kong; its dual-listing in 2019 was touted as a symbolic homecoming for the company.)

Shortly after ride-hailing giant Didi went public on the New York Stock Exchange at the end of June, Beijing banned it from app stores over cybersecurity concerns. The stock plunged, and is still trading well below its IPO price of $14 a share.

US securities regulators have also expressed concern about future Chinese public offerings, with the Securities and Exchange Commission telling staff last week to ask such firms to disclose more information before trading plans can be approved.

Regulatory scrutiny on a broadening number of industries has also spooked investors. A stock market sell-off last week wiped out hundreds of billions of dollars in market value for several prominent Chinese tech companies, including Alibaba. That came as Beijing issued directives for education tech, food delivery and other sectors.

Chinese state media has since urged investors to stay calm, with one newspaper telling investors to "have confidence in the market."

"A short-term shock does not change the nature of the long-term positive trend," read a commentary published in the Securities Times last week. "China's economy and markets are at an advantage in terms of its width and depth."

-- Chris Isidore Paul R. La Monica, Laura He and Michelle Toh contributed to this report.

The-CNN-Wire
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Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 515504

Reported Deaths: 10296
CountyCasesDeaths
Harrison34999558
DeSoto33360432
Hinds32743643
Jackson24906392
Rankin22565405
Lee16455245
Madison14954283
Jones14158248
Forrest13834260
Lauderdale12311323
Lowndes11357193
Lamar10693140
Pearl River9748244
Lafayette8868143
Hancock7849132
Washington7559169
Oktibbeha7229138
Monroe7068179
Pontotoc7033110
Warren6885178
Panola6791135
Neshoba6744210
Marshall6707142
Bolivar6468151
Union643598
Pike5942157
Alcorn5921107
Lincoln5540136
George510680
Prentiss508285
Tippah495683
Itawamba4884107
Scott478999
Tate4777117
Adams4776125
Leflore4749144
Copiah458195
Yazoo458092
Simpson4566117
Wayne443472
Covington434895
Sunflower4319106
Marion4295112
Coahoma4244110
Leake414191
Newton396182
Tishomingo386894
Grenada3789109
Stone366166
Jasper341266
Attala340490
Chickasaw318367
Winston318392
Clay312978
Clarke301695
Calhoun286850
Holmes272889
Smith270552
Yalobusha244947
Tallahatchie232353
Greene225149
Walthall222166
Lawrence220242
Perry214556
Amite210357
Webster206548
Noxubee188843
Montgomery182157
Carroll175441
Jefferson Davis174343
Tunica163539
Benton153139
Kemper145441
Choctaw137027
Claiborne134839
Humphreys132239
Franklin126530
Quitman107828
Wilkinson106139
Jefferson97134
Sharkey65321
Issaquena1957
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Alabama Coronavirus Cases

Cases: 848137

Reported Deaths: 16185
CountyCasesDeaths
Jefferson1164052005
Mobile743681384
Madison53497738
Shelby38435371
Baldwin38195589
Tuscaloosa36152644
Montgomery34562782
Lee25655264
Calhoun22630520
Morgan22530411
Etowah20069520
Marshall18846318
Houston17777426
St. Clair16958359
Limestone16195220
Cullman16157306
Elmore15940295
Lauderdale15069307
Talladega14260302
DeKalb13083271
Walker12168380
Blount10779193
Autauga10560157
Jackson10214196
Coffee9435192
Colbert9366210
Dale9044192
Tallapoosa7285202
Russell710065
Chilton7090170
Covington6969197
Escambia6967144
Franklin6364108
Chambers5801142
Marion5437132
Dallas5302210
Pike5129109
Clarke485786
Lawrence4850130
Winston4793110
Geneva4655136
Bibb435795
Barbour370680
Butler3444101
Marengo342993
Monroe338366
Randolph337867
Pickens334890
Fayette331785
Henry321166
Cherokee320364
Hale319189
Crenshaw261678
Washington256852
Cleburne255460
Lamar253555
Clay252969
Macon246367
Conecuh193562
Coosa186048
Wilcox178538
Lowndes178468
Bullock152845
Perry141840
Sumter139841
Greene130545
Choctaw94428
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