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Alibaba Group Holding Ltd ADR BABA

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China Releases Draft Guidelines for Internet Names; Further Sell-Off May Create Buying Opportunities

Dan Baker Senior Equity Analyst

Analyst Note

| Dan Baker |

The Chinese government announced a set of draft antitrust regulatory guidelines for Internet-based platform companies on Nov. 10. Alibaba, Tencent and JD in our coverage sold off 12%-17% in the following two days. This represents another wave of regulatory forces on the Chinese Internet giants in the past two years. Given its detailed framework with an extensive list of well-defined monopolistic practices, we believe this could be a strong signal of a regulatory tightening, especially coming right after the suspension of the Ant Group IPO. These guidelines come only 10 months after regulators proposed a revision to the master Antitrust Law to include Internet companies.

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Company Profile

Business Description

Alibaba is the world’s largest online and mobile commerce company, measured by GMV (CNY 5.7 trillion/$846 billion for the fiscal year ended March 2019). It operates China’s most-visited online marketplaces, including Taobao (consumer-to-consumer) and Tmall (business-to-consumer). Alibaba's China marketplaces accounted for 68% of revenue in fiscal 2019, with Taobao generating revenue through advertising and other merchant data services and Tmall deriving revenue from commission fees. Additional revenue sources include international retail/wholesale marketplaces (7%), cloud computing (7%), digital media and entertainment platforms (6%), Cainiao logistics services (4%), and innovation initiatives/other (1%). Mobile GMV accounted for roughly 85% of consolidated GMV in fiscal 2019.

c/o Alibaba Group Services Limited, 1 Matheson Street
Hong Kong, Cayman Islands
T +852 22155100
Sector Consumer Cyclical
Industry Internet Retail
Most Recent Earnings Sep 30, 2020
Fiscal Year End Mar 31, 2021
Stock Type
Employees 122,399