Business

Yahoo! tanks on slowing Alibaba growth

Shares of Yahoo! tumbled more than 5 percent on Monday after Chinese e-commerce company Alibaba showed growing expenses amid slowing revenue growth.

Alibaba, which is expected to pull off the biggest initial public offering in history this year, said revenue in the fourth-quarter ended in March grew by 39 percent to $1.9 billion, compared to growth of 71 percent the previous year.

Overall, revenue grew 38.7 percent over the last fiscal year, compared to 52.1 percent last year and 72.4 in fiscal 2012.

Headquarters of Alibaba Group in Hangzhou, in eastern China.AP

Alibaba, which makes money from online marketing services and commissions from transactions, also said operating margins narrowed to 45 percent from 51 percent over the last year.

The company attributed to squeeze to increased marketing expenses, as well as an a jump in share-based compensation provided to employees of Alipay — it’s online payments arm.

Yahoo!, which owns a 23 percent stake in Alibaba, traded down 5.1 percent to $35.06 in mid-day trading.

Alibaba’s filing is the latest in its effort to sells shares to US investors . Wall Street is banking that the Chinese company’s IPO will surpass Visa’s $19 billion offering in 2008, as well as Facebook’s $16 billion IPO in 2012.

To be sure, Alibaba reported a massive $177 billion in transactions last year, almost double the $100 billion in transactions by Amazon.com.

Alibaba is made up of a basket of companies, including Taobao, its e-commerce site for retail consumers. Alibaba.com is China’s largest wholesale marketplace for small business owners.

Alibaba also revealed the names of 27 insiders who control the company’s board of directors amid calls for increased disclosure ahead of the IPO.

The company said Yahoo! co-founder Jerry Yang will serve as an ”independent” director following the IPO, despite serving as a director from 2005 to 2012.

J. Michael Evans, who worked at Goldman Sachs from 2008 to December 2013, will also be on the board.