Alibaba (BABA  ) reported Q4 results which came in better than expectations, however, the report was overshadowed by concerns about CEO Jack Ma's fate and other regulatory risks it faces as it's gotten in the crosshairs of the Chinese government. Shares were down about 5% following the report, but the company recovered these losses in the ensuing days.

Inside the Numbers

Total revenue for Q4 came in at $33.1 billion which topped analysts' expectations of $32.2 billion. Earnings per share came in at $3.40 vs expectations of $3.23.

A big milestone for Alibaba is that its cloud computing unit became profitable for the first time in its history with a $3 million profit. In contrast, AliCloud had a $56 million loss in 2019's Q4. Previously, the company had projected Q1 would make the cloud unit's first profitable quarter, however it was able to beat this timeline due to higher COVID-induced demand.

This is the fastest-growing part of the business. Alibaba is currently the fourth-largest cloud company in the world out of Microsoft (MSFT  ), Amazon (AMZN  ), and Google (GOOG  ) but is growing the fastest among these four. Alibaba's cloud unit is growing at a 50% pace, while its competitors are in the 20s to 30% range.

In addition to its cloud business, Alibaba has several other ventures including AI, food delivery, logistics, and fulfillment. However, its core business is its B2B and B2C ecommerce platform. In Q4, this accounted for $30.3 billion which was 89% of total revenue. This represents a 38% increase from last year.

Stock Price Outlook

While such a strong report would drive most companies' stocks higher, this is not the case for Alibaba whose bigger issue is its problems with regulators. The company was flying high in October. The stock was making new highs, and the Ant Group was imminent with many expecting it to be one of the largest IPOs in history.

However, the IPO was delayed due to Jack Ma's public criticisms about regulators who were treating Ant Group like a bank rather than a tech company. As a result, Alibaba said that Ant Group will likely have to make significant changes to the business in order to comply with the stricter regulation.

In its report, the company gave an update: "Ant Group's business prospects and IPO plans are subject to substantial uncertainties. Currently, we are unable to make a complete and fair assessment of the impact that these changes and uncertainties will have on Alibaba Group. We will update the market once Ant Group has completed the relevant regulatory procedures for its rectification plan."

It's an unfortunate reality for Alibaba as fintech stocks and Chinese Internet stocks are both quite strong. Going forward, investing in Alibaba is making a bet that these regulatory issues won't get worse. However, Alibaba is now facing an antitrust investigation and likely changes to Ant Group's business model.