Even Alibaba isn’t immune to epidemics after all. In yet another example of the business impact of coronavirus, e-commerce giant Alibaba says that it expects a setback in the first quarter of 2020 due to the outbreak. The company blames the affected supply chain and says that it will eventually lead to a slowdown. “We like other businesses are not immune to supply and demand,” said Finance chief Maggie Wu.
The whole Chinese economy is likely to suffer due to the Wuhan-originated virus, which has claimed the lives of 1,350 people in the country and infected thousands others. This comes at a very crucial time, as the government was in the midst of setting up a trade deal with the U.S. government which could have potentially eased tension on both sides and quite possibly, end the Sino-U.S. trade war. For now, that seems highly unlikely.
Alibaba has broken analysts’ expectations every quarter, and has been a consistent pillar for the country’s economy. In Q3 2019, the core commerce business of the group reported a revenue of 141.48 billion yuan. The total revenue for the company ended up being 161.46 billion yuan, beating estimates of 159.28 billion yuan. However, this time around, things are expected to be a little different.
People will be returning to work later than usual after the Lunar year, and that is expected to drive revenues down. Moreover, CEO Daniel Zhang said that have also dropped on an year on year basis as more and more restaurants are closing up due to the outbreak. Even though the demand is higher than ever, disrupted flow of the supply chain will take its toll on the numbers produced in this quarter.
“Alibaba’s earnings for the next couple of quarters are certainly likely to take a hit from the coronavirus outbreak. However, the company’s business is strong enough to withstand the brief downturn, with its cloud computing business set to lead the charge for a more positive outlook,” said Jesse Cohen, senior analyst at financial markets platform Investing.com.
However, there is a silver lining in all of this, as DingTalk, the company’s enterprise chat app is witnessing explosive growth due to white collar businesses and schools using it more to operate in the time of crisis.
Alibaba is determined to help in any way it can to curb the casualties and ease up the suffering of the people of China, and has promised to supply of daily necessities and introducing relief measures for its merchants. Also, Alibaba affiliate Ant Financial’s MYBank unit has said it will offer 20 billion yuan ($2.9 billion) in loans to companies in China in the wake of the outbreak.
