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Alibaba's profit drop

January 29, 2015

Chinese e-commerce giant Alibaba has logged a jump in revenue, but it hasn't been big enough to meet investors' expectations. The company's shares took a dive as the firm reported a fall in net profit.

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Alibaba HQ (Photo: dpa)
Image: picture-alliance/dpa

Chinese Internet giant Alibaba booked a 40-percent jump in sales in the fourth quarter to $4.2 billion (3.7 billion euros), missing the $4.45 billion in revenues which analysts had expected.

Q4 net income dropped by 28 percent to $964 million year-on-year, the online shopping platform announced Thursday.

It was the company's second earnings report since its initial public offering in September, with Alibaba now counting 334 million active buyers.

Product piracy in play?

The drop in profit is not Alibaba's major concern at present, though. The company has come under attack from Chinese regulators. The State Administration for Industry and Commerce (SAIC) accused Alibaba of allowing "illegal operations" to flourish on its shopping websites and ordered the firm to change its policy.

The sharp criticism came after a SAIC survey published last week found that only about a third of products sampled were genuine.

Alibaba executives rejected the allegations, saying the survey had a "flawed approach" and that it was preparing a formal complaint to the SAIC.

Often described as the Chinese version of eBay, Alibaba has long bested the US platform. Its earnings also far surpass those of US e-commerce giant Amazon, which has been posting massive losses after a series of product launches including phones, tablets, and TV shows.

hg/bk (Reuters, AFP)