China’s Ant Group’s quarterly profits plummeted following a long-term crackdown on the country’s tech sector.
The FinTech contributed $145 million to its affiliate Alibaba’s earnings, according to a Thursday (Feb. 23) earnings report, which translated to an 82.3% drop.
“The year-over-year decrease in share of profit of Ant Group was mainly due to decrease in the valuation of certain overseas equity investments, resulting from changes in capital market conditions,” the report said.
However, as PYMNTS has written Ant Group and Alibaba have been distancing themselves from each other since Ant Group’s $37 billion initial public offering (IPO) was blocked by regulators in China at the end of 2020.
Last month, Ant Group announced that the company’s founder, Jack Ma, would give up control of the firm. At the time, Ant Group said the company had no plans for an initial public offering (IPO).
Ma had control of his 50.5% stake in Ant Group via an investment vehicle called Hangzhou Yunbo. He owned a 34% stake in Hangzhou Yunbo. The rest of the firm was split between Ant CEO Eric Jing, former CEO Simon Hu, and veteran Alibaba executive Fan Jiang, Ant Group’s former non-executive director.
According to a statement from Ant Group, the four will “terminate their acting-in-concert arrangement for the voting of shares of Yunbo Investment,” as part of what Ant deemed an “adjustment” of its shareholding structure.
Last month saw signs that China was easing its earlier pressure on the tech sector, while also trying to be involved in the industry via the launch of Strong Nation Transport.
The new Strong Nation Transport app will initially be offered to Communist Party members, catering to employees of the government and state-owned enterprises. It will give users access to the cars available to other ride-hailing services doing business in China.
“Because of the previous problems of disorderly expansion and data security in the ride-hailing industry, Strong Nation Transport is built on the principles of convenience and security,” the state-owned Beijing Daily reported last month.
Meanwhile, Aliaba’s earnings showed the company’s growth slowing somewhat during the quarter due in part to China’s COVID restrictions, PYMNTS reported.
As noted here, the company’s stock is down sharply from its late 2020 peak of over $300. Alibaba was able to ride the same wave that lifted many tech firms during the start of the pandemic. But since then, it has been hurt by fading consumer sentiment, COVID-related measures and the same tech crackdown that hampered Ant Group and others.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More