Expectations are high that earning data for the second quarter of China’s tech tyrants will hit a nadir as the sector continues to weather more regulatory crackdowns and blows from the country’s pandemic labyrinth. 

According to a report by Nikkei Asia on August 1, analysts surveyed by Refinitiv are looking for negative quarterly revenue growth from Alibaba Group Holding and Tencent Holdings. 


They envision that e-commerce leader Alibaba will post revenue of 30 billion dollars, which is a 1.22% reduction from the April to June period last year. Tencent may see revenue drop 2.12% from a year earlier to over 20 billion dollars.

The Refinitiv survey believes Alibaba’s peers JD.com and Pinduoduo will also report the slowest revenue growth at 3.9% and 2.3%, respectively.

Overseas, tech companies from China are under delisting pressure from the U.S.-China audit standoff. Alibaba’s U.S. stock price tumbled more than 11% last Friday after the U.S. Securities and Exchange Commission included it on its blacklist. Its Hong Kong shares dipped as much as 6% on Monday morning.

Domestically, their businesses are constrained by a double whammy of pandemic curbs and continuous scrutiny from regulators.

Transactions at the 618 Shopping Festival in June only increased 10.3% year over year to 58.7 billion dollars, which is substantially less than the 27.7% increase in the prior year. This is the second largest shopping event in China annually.

As Nikkei Asia noted, employment fragility and lockdown threats are taking on consumers’ spending nerves, slowing down consumption.

Alibaba’s live-streaming sales are also hit as regulators eye influencers over tax violations and content. Earlier in June, a top internet celeb in China was abruptly canceled over a piece of cake that inadvertently tapped on Beijing’s taboo in his live stream section. 

The Shanghai police data leak scandal last month will also leave a dent in Alibaba’s cloud business, which is the host of the information. Cloud service is the company’s second-largest income stream. 

For gaming mammoth Tencent, its business is expected to scramble because Chinese officials have not let go of their control over the gaming industry and other sectors that heavily use the company’s advertising platforms. Titles from Tencent and NetEase are still missed from the latest round of title approval on August 1.

Nikkei Asia says shares of Alibaba and Tencent rose last month on hopes that Beijing would relax its control over the internet industry. Still, over the following few weeks, they have fallen 30% and 25%, respectively.

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