Alibaba revealed that it expects the coronavirus, which originated in the Wuhan province of China and sparked global epidemic fears, will negatively affect its revenue moving forward, according to a Reuters report.
The drop will be seen in the company’s various eCommerce business ideas, Alibaba said, and it has affected various supply chains and delivery schedules.
The news was shared in an earnings call about 2019 Q4, in which the company also shared that it beat estimates for its yearly Singles’ Day shopping event.
Many factories and stores were closed after the coronavirus outbreak, and Alibaba CEO Daniel Zhang said the delay caused logistical problems for filling orders.
The virus has killed more than 1,350 people in the country, and it has infected thousands more.
Restaurant deliveries were particularly affected, Zhang said, because restaurants were closed due to the outbreak, and while demand was up for delivered goods from places like supermarkets, the limited delivery capacity hindered that as well.
Chief Financial Officer Maggie Wu said physical goods sales were probably going to see a decline as well.
“We, like other businesses, are not immune to supply and demand,” she said. “Their recovery and long-term success will translate to long-term growth for Alibaba Group.”
As of Monday (Feb. 10), Zhang said more people were returning to work, and that would help things return to normal.
One bright spot for the company was that DingTalk, the company’s chat app, has seen “explosive growth” for use by businesses and educational institutions alike.
“Alibaba’s earnings for the next couple of quarters are certainly likely to take a hit from the coronavirus outbreak,” said Jesse Cohen, senior analyst at Investing.com. “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.”