Ant Group IPO delayed by six months, Alibaba shares soar on earnings

• Ant Group IPO pushed back six month by Chinese regulators
• Alibaba shares rebound after Q2 earnings beat forecasts, despite revenue missing mark

Ant Group’s hotly anticipated IPO has been postponed for six months, with Chinese regulators stepping, citing ‘major issues’ due to regulatory changes in the financial technology sector.

The delay by regulators robs investors of an IPO that is expected to be the world’s largest share offering, with the company looking to raise more than $35 billion in a dual-listing on the Hong Kong and Shanghai exchanges.

‘Also reported on major issues such as changes in the financial technology regulatory environment,’ The Shanghai Exchange wrote in an announcement regarding the suspension of Ant Group’s IPO. ‘This major event may cause your company to fail to meet the issuance and listing conditions or information disclosure requirements.’

In response, Ant Group said that it will ‘properly handle’ the situation in ‘accordance with applicable regulations of the two stock exchanges’ and hopes to ‘overcome the challenges’.

What next for Ant Group?

It will interesting to see how the six month delay impacts Ant Group’s IPO and how, if at all, it will impact investor sentiment for the hotly anticipated listing.

Commenting on the outlook for Ant Group, IG Market Analyst, Reo Liao said:

‘Overall, Ant Group's growth prospects remain positive, largely because its CreditTech sector is set to become the new engine to drive revenue growth; while the loan balance is expected to surge again if Alibaba can enter higher-end consumer discretionary sectors focusing on products such as jewelleries and watches.’

Bernstein analyst Kevin Kwek offered an upbeat long-term outlook on Ant Group in a research note to clients following news of its IPO suspension.

‘Most investors will remain optimistic on Ant's positive long term prospects,’ he said. ‘Investors might nevertheless revisit their assumptions of growth given the clear signs of regulatory intervention.’

Alibaba mixed Q2 earnings lift share price

Alibaba shares fell more than 7% in reaction to Ant Group’s delayed IPO on Wednesday, only to rebound 6% on Thursday after its Q2 earnings exceeded analysts forecast, despite its revenues falling short of the mark.

‘We remain focused on our three long-term growth engines – domestic consumption, cloud computing and data intelligence, and globalization – to effectively capture opportunities from the ongoing changes in consumer demand and acceleration of digitalization of businesses across our digital economy,’ Alibaba Group CEO and chairman, Daniel Zhang, said.

The Chinese e-commerce giant, which is also owned by Ant Group’s Jack Ma, reported adjusted income of $2.65 per share, exceeding analysts’ expectations of $2.12 per share.

However, the company’s second quarter revenues fell short of the mark, with revenues hitting $22.8 billion, below Wall Street’s forecast of $23.2 billion.

‘We delivered another solid quarter, with revenue growth of 30% year-over-year and adjusted EBITDA up 28% year-over-year,’ Maggie Wu, CFO at Alibaba Group, said.

‘Our domestic core commerce business continued to grow steadily during the post-Covid-19 environment in China through higher purchase frequency and consumer spending, while cloud computing revenue grew 60% year-over-year, driven by the acceleration in digitalization across all industries and businesses of all sizes in China,’ she added.

Alibaba is trading at HK$294.60 at the time of publication, with the stock up 40% year-to-date.

It is worth noting that Alibaba controls a 33% stake in Ant Group and was co-founded by Chinese billionaire Jack Ma.

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