In the December quarter overall, Alibaba said revenue rose 40 percent to $4.22 billion, but missed the average estimate of $4.45 billion, according to Thomson Reuters.

"A lot of the shopping is now converging around Singles' Day," he said in a " Squawk Box " interview, "which is why the growth wasn't quite as high for the rest of the quarter."

"The disappointment today has to do with the aftereffects of Singles' Day," said Gil Luria, who covers financial technology at Wedbush Securities. "I think some people extrapolated that that [growth] should be the growth for the entire quarter."

The disappointing revenue was a sign of a slowdown in the Chinese e-commerce giant's growth during the hard-fought holiday shopping season.

In late morning trading, share prices fell below $88, down about 10 percent. (Get the latest quote here.) If it closes down at least 5.07 percent, it will be its worst day ever.

In the second quarterly report card since its record-breaking $25 billion IPO, Alibaba did post better-than-expected third-quarter earnings excluding items of 81 cents a share.



The company—which began U.S. trading at $92.70 in September—saw its stock touch $120 at one point, but crossed below $100 on Wednesday.

Jack Ma, Alibaba's founder and executive chairman, said earlier this month that he expects much more growth on the horizon, and that "we are still a baby" compared to where the company is going. The company already handles more e-commerce than Amazon and eBay combined.

For the latest quarter, gross merchandise value (GMV), or the sum of all Alibaba's online commerce transactions, rose 49 percent to $127 billion. Mobile GMV accounted for 42 percent of the total, up from 36 percent in the September quarter.

Alibaba takes the long view in the transition to mobile, Executive Vice President Joseph Tsai told CNBC's "Squawk on the Street." He acknowledged that the monetization rate for mobile shopping has been lower than the rate for desktop computer activity.

"We think that monetization over time will take its course because on mobile you can provide more targeted ads to users because of location-based data and other personal data that we can collect. So in the long run we see that mobile monetization is going to trend up," he said.

Margins on earnings before interest, taxes, depreciation and amortization bounced back after a decline in the previous quarter to 58 percent from 50.5 percent in the July-September period.

"We have always said we don't manage to a margin number. Our margins will fluctuate from quarter to quarter depending on our investment plans," Tsai said. "What we would like to ask investors to look at is our initiatives, some of the new things we're doing—investing in the online-to-offline space in local services, digital entertainment. These are the spaces we'll continue to invest in," he said.

The number of annual active buyers on Alibaba's various services, another closely watched metric, rose to 334 million from 307 million in the September quarter.

These metrics were "actually above my expectations," Wedbush's Luria said.

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But the Chinese e-commerce giant is not without criticism, as even the government in Beijing has admonished the platform's lax enforcement against the sale of counterfeit goods.

"It is disconcerting to investors that the Chinese government is the one that's telling Alibaba that it has merchandise that may not be authentic on its website," said Luria. "I think that rattled investors yesterday and probably has some aftereffects today as well."

Alibaba takes its relationship with regulators very seriously, Tsai said. However, the company believes a recent report by Chinese regulators on counterfeit goods in its marketplace "unfairly attacked" and "unusually targeted" Alibaba, he added. The retailer feels the methodology behind the report was flawed.

"The whole marketplace, our entire business, is built on the trust that consumers have in our platform," he said "With a platform that does annually $370 billion GMV a year, you're going to see some issues with it because it's a large reflection of what's going on in the offline community, but we are taking a very draconian approach to cracking down on counterfeits. We put in a lot of resources to do that."

On Tuesday, Yahoo announced it would spin off its remaining stake in Alibaba.



Asked whether he would be interested in investing in the new company, Spinco, Tsai said the announcement does not change day-to-day operations for Alibaba. "Today Yahoo is a 15-percent shareholder in us. After the spinoff we're going to have another corporation that is also a 15 percent shareholder in us."

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Sources told CNBC's Kayla Tausche that Alibaba has not retained any advisers to evaluate a transaction related to Spinco. Nor did Alibaba hold talks with Yahoo before the plan was announced.

—Reuters contributed to this report.