The market capitalization of Alibaba, China’s largest e-commerce company that operates AliExpress and Taobao, has reportedly decreased to about half of Tencent, a rival information technology (IT) company, amid slowing domestic demand and intensifying competition.
Bloomberg reported on the 18th (local time) that Alibaba’s market capitalization was $201 billion and Tencent, China’s largest IT company, had a market capitalization of $384 billion.
Alibaba shocked the market by suddenly announcing on the 16th that it would withdraw its cloud division due to the U.S. control over exports of advanced computing semiconductors. This is the reversal of a major plan in more than seven months after it issued an ambitious blueprint to split the group into six units at the end of March. Since then, Alibaba’s stock price has plunged 10% on the Hong Kong stock market, the largest in more than a year.
“The market capitalization gap between Alibaba and Tencent also reflects the impact of the authorities’ crackdown on Alibaba,” Bloomberg said. “Before the authorities began to crack down on Alibaba at the end of 2020, Alibaba’s market value was significantly higher than Tencent.” Chinese authorities have pressed Alibaba Group in all directions through sweeping regulations after Alibaba founder Jack Ma criticized the authorities’ fintech regulations at a forum in Shanghai in October 2020. In 2021, it imposed an anti-trust fine of 18.2 billion yuan on Alibaba, and in July this year, it imposed a fine of 7.123 billion yuan The market capitalization of Alibaba, China’s largest e-commerce company that operates AliExpress and Taobao, has reportedly decreased to about half of Tencent,on Ant Group, Alibaba’s fintech company, by applying the Anti-Money Laundering Act and the Banking Supervision Management Act.
“China’s tepid consumer recovery and rising competition in e-commerce both make Alibaba’s business environment difficult,” Forsyth Bar Asia analyst Willer Chen told Bloomberg. “In addition, concerns over regulations by authorities on Alibaba weighed on investors’ sentiment earlier.”