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Alibaba shares dive as growth misses Wall Street's forecasts Alibaba shares dive as growth misses Wall Street's forecasts
(about 1 hour later)
Jack Ma, China’s richest man, is in need of a little magic following a surprisingly poor debut set of results from Alibaba that wiped more than $25bn (£17bn) off the company’s valuation.Jack Ma, China’s richest man, is in need of a little magic following a surprisingly poor debut set of results from Alibaba that wiped more than $25bn (£17bn) off the company’s valuation.
Just a day after a Chinese regulator said it was investigating the online retailer over the sale of counterfeit goods on its websites, the New York-listed Alibaba disappointed the market with revenue growth well below forecasts.Just a day after a Chinese regulator said it was investigating the online retailer over the sale of counterfeit goods on its websites, the New York-listed Alibaba disappointed the market with revenue growth well below forecasts.
The company, where Mr Ma is founder, executive chairman and the largest shareholder, reported top-line revenue growth of 40 per cent to $4.22bn – some way short of market expectations of $4.45bn.The company, where Mr Ma is founder, executive chairman and the largest shareholder, reported top-line revenue growth of 40 per cent to $4.22bn – some way short of market expectations of $4.45bn.
 Even so, with about 80 per cent of the Chinese e-commerce market, Alibaba is growing at a far faster rate than its US rivals, including Amazon and eBay. The total value of all Alibaba transactions during the quarter was $127bn, with 42 per cent of that coming from mobile apps.   Even so, with about 80 per cent of the Chinese e-commerce market, Alibaba is growing at a far faster rate than its US rivals, including Amazon and eBay. The total value of all Alibaba transactions during the quarter was $127bn, with 42 per cent of that coming from mobile apps.
The results could force Yahoo! to sell its 15 per cent stake in the business for much less than it had hoped. Today’s fall in Alibaba’s share price – to about $89 in afternoon trading –means the US group’s stake is worth $4bn less than it was on Tuesday, when Yahoo! announced that it would create a new company to hold the stock.The results could force Yahoo! to sell its 15 per cent stake in the business for much less than it had hoped. Today’s fall in Alibaba’s share price – to about $89 in afternoon trading –means the US group’s stake is worth $4bn less than it was on Tuesday, when Yahoo! announced that it would create a new company to hold the stock.
The disappointing financial news came on the back of Wednesday’s report by the Beijing-based State Administration for Industry and Commerce , which accused Alibaba of failing to do enough to prevent the sale of fraudulent and fake goods on its websites.The disappointing financial news came on the back of Wednesday’s report by the Beijing-based State Administration for Industry and Commerce , which accused Alibaba of failing to do enough to prevent the sale of fraudulent and fake goods on its websites.
Joe Tsai, Alibaba’s vice-chairman, did not hold back in his defence of the company in the face of claims that the SAIC discussed the report’s findings in a meeting with the company in July, but delayed releasing the report to avoid affecting the stock flotation in New York last September.Joe Tsai, Alibaba’s vice-chairman, did not hold back in his defence of the company in the face of claims that the SAIC discussed the report’s findings in a meeting with the company in July, but delayed releasing the report to avoid affecting the stock flotation in New York last September.
“The report was false and based on an arbitrary methodology,” said Mr Tsai, adding that the meeting in July did  not involve discussion of the subjects in the report. “The report was false and based on an arbitrary methodology,” said Mr Tsai, adding that the meeting in July did  not involve discussion of the subjects in the report. 
The timing of when Alibaba knew about the report’s findings could have serious legal and financial implications. It  warned in its prospectus that it could “be subject to allegations and lawsuits… that items listed on our marketplaces are pirated, counterfeit or illegal”, and said it was “subject to Chinese and other foreign government inquiries”.The timing of when Alibaba knew about the report’s findings could have serious legal and financial implications. It  warned in its prospectus that it could “be subject to allegations and lawsuits… that items listed on our marketplaces are pirated, counterfeit or illegal”, and said it was “subject to Chinese and other foreign government inquiries”.
But lawyers said that not disclosing the SAIC concerns, if it knew about them before the IPO, could leave it open  to legal action from shareholders and regulators. But lawyers said that not disclosing the SAIC concerns, if it knew about them before the IPO, could leave it open  to legal action from shareholders and regulators.