aliexpress is a mess

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The Chinese company has lost 70% of its stock market value since October 2020 and has also just been included by the United States for the first time in the list of counterfeit markets. A setback that comes after presenting very poor financial results with a collapse in profits of more than 50%

The Asian ecommerce giant is experiencing one of its most difficult moments in recent years and is already trading below the IPO price in 2015. A total disaster if we take into account that the company was positioning itself as an alternative to Amazon and that in 2020 almost touched the sky. The harsh reality is that the US company is worth 1.5T dollars while Alibaba is worth just 250,000 million, that is, six times less. What is happening that the company founded by Jack Ma is plummeting?

Alibaba revenue plummet

The company that reported quarterly results a few days ago announced that it obtained a net profit of 10,031 million euros during the first nine months of its fiscal year. This figure represents 54.47% less than the previous year and what is more worrying, the outlook is not positive. The company justified the drop in income due to lower billing in different unspecified areas and the contraction of some of its investments.

In its third fiscal quarter, the company’s situation worsened with a drop in profits of 74%. The company sells less and less, has lower margins and quite possibly its rivals (JD, Pinduoduo, etc.) are taking market share away from it. Company sources who prefer to remain anonymous point out that there is no control of their expenses and that investments in advertising are mammoth without any kind of rigor, perhaps a drop in the ocean but that explains the poor management at a general level.

Chinese regulation

The Asian country is also contributing to its giants going through this difficult time. Xi Jinping’s government launched a “common prosperity” campaign to get tech leaders to share their wealth. For example, Ele.me owned by Alibaba and dedicated to food delivery will have to reduce the commissions it charges restaurants and also offer its service nationwide. A setback for the accounts of the subsidiary that must obviously abide by to avoid sanctions.

Throughout 2021, the Chinese government was applying regulatory measures and even millionaire sanctions to all its Internet giants to avoid its dominant position. Measures that the market obviously dislikes and that added to Alibaba’s mismanagement have led it to lose more than 500,000 million dollars in the stock market. The harsh reality is that the outlook is not positive and the company has confirmed that its revenues will continue to deteriorate in the coming quarters.

Alibaba on US counterfeit blacklist

For the first time, the Office of the United States Trade Representative (USTR) has included the Chinese company in its blacklist. The American administration considers that the Asian giant facilitates the counterfeiting of brands and also distributes them. The reality is that it is nothing new, the famous “bought on Aliexpress” joke refers to all the trinkets and fakes that can be purchased without any control. In 2016 the United States already included TaoBao, owned by Aliexpress, in its blacklist, in 2022 the American regulator has included the entire company.

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