BABA: One year and $344bn downAlibaba founder Jack Ma gave a blunt speech this time last year condemning China’s communist government, bringing down its wrath on his e-commerce giant Alibaba that has made history – but not in a good way. The company has since become the subject of a regulatory crackdown that has left its stock reeling, along with the rest of the tech industry in China, and Alibaba has lost $344 billion in value since the infamous speech – the largest ever decline in shareholder value globally.
Is the threat of a Chinese crackdown actually over?Alibaba is currently enjoying a monthly increase of nearly 20% after spending the last three months in the red, but traders warn that Chinese stocks aren’t in the clear with Chinese regulators yet.
Chinese e-commerce platform Alibaba has gotten investors buzzing this week, releasing a new processing chip on Tuesday as the e-commerce platform tries to bulk up its cloud computing business, which it sees as an important part of its future growth. Other Chinese stocks have made a comeback this month too as China’s reign of regulatory terror seemed to come to an end – stocks like BiliBili (BILI), Baidu (BIDU), and JD.com (JD) have had impressive October’s too, but there are some warning against getting too excited. ERShares chief investment strategist Eva Ados says:
We would advocate no more than a small risk speculative position when it comes to China. Much of ([the rebound), we believe, is because of the big overreaction we saw earlier in September. The risk, the regulatory risk, is real. It’s unpredictable. It’s here to stay, and many companies that we’re tracking are still grappling to meet the regulatory demands. There are two key factors when it comes to investing in an emerging market: the foreseeable future growth and the perceived risk. In the case of China, you have a big decrease in the foreseeable expected growth.
Alibaba is currently trading at its highest levels since the start of September.
A Jack Ma sighting thrills investorsAlibaba leaps up to its highest closing price since mid-August after CEO Jack Ma appears in Europe following the release of a brand new chip.
Alibaba has gotten investors buzzing this week, first releasing a new processor, called Yitian 710, on Tuesday as the e-commerce platform tries to bulk up its cloud computing business, which it sees as an important part of its future growth. Prices jumped over 6% in the U.S. to its highest closing price in over two months on Tuesday, boosted by a Jack Ma sighting. Shares were up 9% in Hong Kong trading after the mysterious founder, who has been MIA for around a year now, was spotted in Spain enjoying a luxury vacation – so the last year can’t have been too bad for him. Tariq Dennison, wealth manager at Hong Kong-based GFM Asset Management, said:
There is no doubt in my mind that Jack Ma no longer being missing would have at least a 10% impact on Alibaba’s share price, as that has long been one of the uncertainties many investors have had about the stock.
Alibaba is currently enjoying a monthly increase of over 20% after spending the last three months in the red, and closed Tuesday up 6.10% at $177.
Alibaba challenges Big TechE-commerce giant Alibaba launches its latest server chip, which will boost its cloud business into competition with big dogs like Amazon and Microsoft.
Alibaba’s new processor, called Yitian 710, was released on Tuesday as Alibaba tries to bulk up its cloud computing business, which it sees as an important part of its future growth. The Chinese platform. Jeff Zhang, president of Alibaba Cloud Intelligence and head of Alibaba’s research arm Damo Academy, said:
Customizing our own server chips is consistent with our ongoing efforts toward boosting our computing capabilities with better performance and improved energy efficiency.
The pandemic has accelerated how quickly the world has switched to the world of the digital, and as demand for cloud services skyrockets, companies are having to create increasingly powerful semiconductors to keep up. Alibaba’s new chip is one of the most powerful from a Chinese firm thus far, and the company is hoping to join the big leagues against Amazon and Google.
Is Alibaba losing its edge?Earnings season is heating up, but Alibaba analysts aren’t feeling confident about what the e-commerce company will have to say, slashing their estimates on the back of weak consumer spending.
Analysts covering Alibaba stock aren’t feeling confident about what third quarter earnings have in store, slashing their 12-month earnings projection by just under 5% in the last few weeks to their lowest levels since mid-2019. The bearish turn comes on the back of weaker than expected consumer spending in the quarter that will likely hit a number of tech companies. Daiwa Capital Markets Hong Kong posits that this will be “one of the most challenging quarters” the platform has ever faced, and it’s not great timing either considering the stock is currently trading down at levels unseen since 2019 despite a rally of 12% last week.
Illustration by TradingView
Rising bond yields drag down Alibaba’s winning streakAlibaba has been rallying in the last week, rising over 17% in a week as its recent low valuation has brought in more buyers – before the rally, Alibaba had been trading at its lowest prices since the end of 2019. Its recovery hit an obstacle on Tuesday though as the market considered rising bond yields and inflation. The market is lukewarm on the company, with no Sell ratings on the stock and 36 of 38 analysts are recommending a Buy – though forecasts suggest a 51% increase over the next year.
Chinese stocks lift on hopes that the worst is overChinese stocks started the week on a high, with Alibaba leaping 8% in Hong Kong trading after China’s biggest on-demand delivery service landed a $500 million antitrust fine – which might not sound like a reason to celebrate, but the fine was way lower than the billions of dollars people were expecting. China has been cracking down on domestic technology companies this year, wiping billions off the value of the region's tech stocks, so this fine gives investors hopes that regulators are becoming more open to compromising with companies from an antitrust point of view. Zhang Liangwei, an analyst at Soochow Securities in Shanghai, said:
With the result of the antitrust investigation out of the way, the policy risk has diminished. There’s no further bad news on that front.
Alibaba ended last week, lifting over 12% in two sessions on news that the Presidents of China and the U.S. are planning on holding a virtual meeting.
Buffett's bestie bets big on BABACharlie Munger – a well-known pal of Warren Buffet – is betting big on China, and has increased his Alibaba position by over 83% in Q3.
Charlie Munger, Chairman of The Daily Journal (DJCO) and vice chair of Buffett’s Berkshire Hathaway (BRKB), is upping his bet on China with a massive increase in his Alibaba holdings. The stock has had a rough time this year, losing over half of its value, but Munger is undeterred and in the third quarter his company The Daily Journal (DJCO) has increased its stake in the company by over 83%. The company now holds around $43 million in Alibaba shares.
The company got a boost on Thursday with news that the Presidents of China and the U.S. have plans in the works to hold a virtual meeting, giving investors of Chinese-U.S. listed stocks hope that the frosty economic relationship between the two might start to thaw. Alibaba closed Thursday up 8.26% at $156 – its highest one day jump in months.
Asa Mathat / Flickr
Chinese stocks lift on hope of U.S./China talksNews that the U.S. and Chinese Presidents are planning on talking lifts U.S listed Chinese stocks like Alibaba up over 8% on Thursday on hopes that the meeting will positively impact economic relations between the two.
Shares of Alibaba and other Chinese stocks like Nio (NIO), Xpeng (XPEV), JD.com (JD), and Baidu (BIDU) are trading higher in Hong Kong trading after some positive political news. Chinese president Xi Jinping and U.S. president Joe Biden have agreed “in principle” to have a virtual meeting before the end of the year. The hope is that the talk will improve communications between the two, who have been at a stalemate regarding global issues. A senior U.S. administration official said:
Today's conversation, broadly speaking, was a more meaningful and substantive engagement than we've had to date below the leader level. What we are trying to achieve is a steady state between the United States and China where we are able to compete intensely but to manage that competition responsibly.
Alibaba ended the day up 8.26% at $156, it's biggest one day jump in months.
UN Photo/Pierre Albouy
Alibaba jumps into air cargoAlibaba’s logistics unit, Cainiao Smart Logistics Network, has expanded into the air cargo space.
Last week, Alibaba-owned Cainiao dished out $248 million for a 20% stake in Air China Cargo, marking its first foray into the air cargo field. Cainiao adds to a long list of logistics companies exploring the new sectors after seeing this year’s container shipping crisis.
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Baba sheds its media stakesChinese regulators have been cracking down hard-core on technology and media companies, and Alibaba takes an exit and drops its entire stake in a local TV station and shopping network. Alibaba only purchased its 5% stake in Mango Excellent Media Co. around nine months ago. The move follows on from reports in March that regulators are concerned about Alibaba’s influence over Chinese public opinion and wanted Jack Ma’s group to drop some its media assets. Shares in Mango have also dropped over 40% since Alibaba’s investment was announced, so it was hardly bringing in the big bucks. Feng Chucheng, a political analyst with consultancy Plenum, thinks more asset sales could be on the way:
This may be the beginning. Beijing is very concerned of big capital’s control of media, as they would be also to leverage their control for ‘illegitimate’ interest or manipulation of public opinions.
Alibaba is currently trading at its lowest levels since January 2019, closing Thursday at $151.19.
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Chinese stocks chug lowerAlibaba sinks along with the broader global market on concerns for the impact of Chinese real estate giant Evergrande’s potential collapse.
News that Evergrande Group could go bankrupt ignited a sell-off in stocks around the world. Chinese real estate giant Evergrande (3333) made it clear it's not able to pay back its creditors at the moment – the company is deeply entrenched in China’s financial market and all of Evergrande’s creditors are domestic banks and financial institutions. Such an event could cause economic instability in the world’s second largest economy, sending waves through Beijing and the rest of the world.
Alibaba sank 5.35% to its lowest closing price sink June 2019 at $151.49.
Is a correction on the way?Short interest in Alibaba stock is soaring and is at its highest point in 2 years, making people wonder if more losses are on the way.
Alibaba has already lost over half its value since its January 2021 peaks, and now analysts are wondering if further corrections are on the way after finding out that short interest in the stock is up over 7% to its highest point in around two years. Short interest only represents around 2% of its entire public float, but its levels are higher than most other internet retail stocks on the U.S. market.
Prices closed Thursday at their lowest price since August 2019 at $156.26.
Alipay gets backed by U.S. bankAs Alibaba becomes more prominent in the U.S., JP Morgan will start powering credit cards on Alibaba.com.
JP Morgan and Alibaba have teamed up, and the banking giant will now power payments made on Alibaba’s growing e-commerce platform. The deal will help smaller businesses in the U.S. go global, and allow Alibaba to provide a much more efficient U.S. payments service. John Caplan, President of North America and Europe of Alibaba.com said:
These payment facilitation services will help Alibaba.com’s US small business customers further digitize their businesses with ease and peace of mind in order to take full and long-term advantage of the multi-trillion dollar global B2B eCommerce opportunity.
Markus Winkler / Unsplash
Alibaba kicks self-drive up a gearAlibaba gets involved in Chinese autonomous driving start-up DeepRoute.ai in a big way, leading investments of $300 million in its latest funding round.
DeepRoute.ai, a Chinese autonomous driving start-up, has just raised around $300 million in its B-round of financing, which was led by Alibaba. The move underlines Alibaba’s interest in getting involved in the burgeoning driverless car market (which is looking more and more like the future of mobility) having already invested in Tesla rival XPeng (XPEV) and auto-driving start-up AutoX.
Prices still ended Monday down 1.36% though, after dropping 3% in the first few hours of trading on the back of news that Chinese regulators are considering breaking up Alibaba’s payments segment, Alipay.
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Alibaba gets a bump upAlibaba gets a lift of just under 3% and rallies in Hong Kong trading after Tencent boosts market sentiment with a share buyback.
Shares of Alibaba lifted 2.85% on Tuesday as Chinese tech stocks lifted to their highest level in over a month in Hong Kong trading. The rally comes on the back of entertainment giant Tencents’ move to buy back shares worth $12.9 billion, leading traders to pile into the market. Bloomberg Intelligence analyst Matthew Kanterman said:
The lack of more bad regulatory news plus company share repurchases the last few days may be underpinning a continued shift in investor sentiment to being more constructive on China’s tech stocks.
What about investor prosperity?Alibaba gets investors worried about an unnecessary outpouring of money with a $15.5 billion pledge to China’s ‘common prosperity’.
E-commerce giant Alibaba is the latest to contribute to a Chinese government push for ‘common prosperity’, with a $15.5 billion pledge towards President Xi Jinping’s goal to spread wealth. The donation comes amid a broader Chinese crackdown on the tech industry, so perhaps the move was made in part to curry favor with regulators, but there’s concern that the donation will impact Alibaba’s top and bottom lines – $15.5 billion is equivalent to around two-thirds of its 2020 net income.
Image: Markus Winkler / Unsplash
Alibaba gets a finger wagA local Chinese telecoms regulator says Alibaba Cloud must make rectifications after its 2019 data leak.
Alibaba’s cloud computing unit has come under fire after breaking China’s cybersecurity laws with its 2019 data leak, and now regulators are demanding rectifications. After following up on a complaint, it was found that the cloud company had illegally released user registration information to a third party partner without asking for consent first. Alibaba said one single telemarketing employee had leaked the information, and that the matter had been dealt with internally. However, in accordance with China’s new Personal Information Protection Law, which takes effect in November, the company must now take corrective measures. Making rectifications is one of the lightest penalties the company can get under the law, and such data leaks could mean a fine of up to 1 million yuan or even revoking a business license.
Alibaba Cloud currently controls over 40% of the cloud market in China.
Alibaba sees the beginning of recoveryChinese tech stocks spend Tuesday on the rebound, regaining some of its regulatory-induced losses and getting some love from the online army, sending Alibaba up over 6% on Tuesday.
Shares of U.S. listed Chinese e-commerce giant Alibaba saw its shares lift over 6% in Tuesday trading as the Chinese tech market began to recover from its lashing earlier earlier this month from Chinese regulators. China’s tech giants have seen billions wiped off their market value recently, promoted by a tightening of regulatory controls in the region, which have included quick and powerful laws and punishments. Together with fellow e-commerce platforms JD.com (JD) and Pinduoduo (PDD), the group gained over $65 billion in market value on the U.S. market during Tuesday trading. The gains were boosted by a good day on the meme mania market, with Alibaba stock holding the fourth most mentioned spot on Reddit’s WallStreetBets.
The news comes despite fresh disclosure requirements from the U.S. Securities and Exchange Commission (SEC) that aim to increase the transparency of foreign companies listed in the U.S. The regulator is looking to increase investor awareness, requiring much more detailed disclosures from companies before they are able to apply for an IPO. Chinese regulators aren't likely to want any more detail handed over, so there is potential that the rules will cause fresh controversy.
For now though, Alibaba investors don’t seem too fussed, with the stock ending the day up 6.61% at $171.70
A spending frenzyDespite a whole bunch of recent regulatory setbacks, U.S. listed Chinese stocks on Monday saw the largest amount of buying in five years.
Even in the face of a continuing Chinese crackdown on U.S. listed Chinese stocks, retail investors continue to pile into the market, and Monday’s session saw net purchases of U.S. stocks of Chinese companies surpass $400 million. Chinese companies have raised millions of dollars through U.S. IPOs, but Chinese financial watchdogs continue to impose harsh sanctions and fines on those that have managed dual citizenship. Alibaba was the most bought stock in the U.S. market on Monday, with more than double the amount of purchases that newly FDA approved Pfizer saw. Giacomo Pierantoni, an analyst at Vanda Research, said of the activity:
The most important singularity of retail purchases of ADRs is that they weren't contrarian. Since the regulatory crackdown started, retail investors increased their buying on dips, providing liquidity to institutional investors who were exiting long positions.
Alibaba investors feel the painAlibaba continued its China-crackdown fuelled losses, reaching its lowest price in two years and wiping $1.4 billion off the shares of ten key investors.
Shares of e-commerce giant Alibaba have been tumbling since Tuesday, reaching their lowest levels since 2019 on the back of fresh new antitrust rules out of China, which took a chunk of a number of the region’s biggest tech companies. As investors have continued to dump the stock, prices have continued to fall, reaching a two-year low of $159.51 on Thursday. The decline has seen 10 key investors – including Ray Delio, Charlie Munger and Cathie Wood – possibly lose as much a combined $1.4 billion from their Alibaba holdings. Ouch.
Alibaba sinks to another lowAlibaba closes Tuesday at its lowest price since October 2019, down just under 5% as another Chinese crackdown leaves its mark.
Shares of e-commerce giant Alibaba ended Tuesday at its lowest closing price since October 2019, skimming lows of $181.51 before closing down just under 5% at $173.73. The losses come on the back of fresh new antitrust rules out of China on Tuesday morning, which took a chunk of a number of the region’s biggest tech companies.
Chinese watchdogs take another bite out of tech stocksChina is back at it with those regulatory crackdowns, sending Alibaba down in pre-market trading with fresh new antitrust rules.
Chinese tech stocks suffer on Tuesday morning after China continues its crackdown with a new set of rules aimed at curing unfair internet competition. The State Administration for Market Regulation released the draft rules, which cover a variety of restrictions like fake product reviews and how companies are able to use consumers' data. The market regulator has already come after a bunch of internet companies, including Alibaba, for abusing their market dominance, taking billions off the Chinese tech market.
The regulator is leaving the rules open to public review before they take effect on September 15. Alibaba dropped 2.5% in Hong Kong morning trading.
Buyback program rescues disappointing resultsChinese e-commerce giant Alibaba releases a mixed bag of fiscal first quarter earnings, beating earning expectations but reporting revenue below what analysts were hoping for. Shares closed Tuesday down 1.36% but made up for those losses on Wednesday.
China’s original e-commerce behemoth, Alibaba, reported mixed earnings for its quarter ended in June, sending the stock dropping this week after the company missed revenue expectations. Alibaba reported earnings per share of 16.60 yuan ($2.56) on revenues of 205.74 billion yuan ($31.83 billion), compared to expectations of 14.43 yuan ($2.23) on revenue of 209.29 billion yuan ($31.83 billion). Revenue was up 34% from the same period the year before, and net income came in below last year's numbers at 45.1 billion yuan ($7 billion). Alibaba’s core commerce revenue lifted around 35% to 180.24 billion yuan, but that was still below expectations of 184.23 billion yuan.
The poor results come at a particularly bad time for Alibaba, which is still being targeted by the ongoing Chinese regulatory crackdown. Regulators slammed the company with a $2.8 billion anti-monopoly fine in April, and last year halted the $37 billion IPO of its affiliate Ant Group – an affiliation that earned the company a profit of 4.49 billion yuan in its first fiscal quarter.
We are in the process of studying the regulatory requirements, evaluating the potential impacts on our relevant businesses and we will respond positively with actions. We believe in the growth of the Chinese economy and long-term value creation of Alibaba. We will continue to strengthen our technology advantage in improving the consumer experience and helping our enterprise customers to accomplish successful digital transformations,
said CEO Daniel Zhang about the regulatory wars.
The chinese e-commerce business tried to make up for its underwhelming numbers by increasing its share buyback program by 50%, from $10 billion to $15 billion – the largest in its corporate history. That wasn't quite enough to woo investors, it seems, and prices ended Tuesday down 1.35%. The stock regained some ground yesterday, though, so not too much damage was done. Alibaba closed at $200 on Wednesday. However, before Ant Group’s IPO was cancelled, prices were trading at well above the $300 mark.
Alibaba nurses regulatory bitesAlibaba sinks to its lowest price since May 2020, down 10% this week as its affiliate, Ant Group, endures growing pressure from Chinese regulators.
China has been on the warpath against its U.S.-listed stocks, and though it may seem like Alibaba has paid its dues with its $2.8 billion antitrust fine in April, the financial watchdogs aren't done yet. The stock closed down 7% on Monday, its lowest price since May 2020, after mounting pressures against some of the country’s biggest tech companies.
There are a couple of factors at play here.
The first is that one of Alibaba’s affiliates, Ant Group, is in talks with the Chinese government over sharing customer data for a new credit-scoring system. If the talks go to the next stage, Alipay would give up control of some of its users’ data, which Chinese state-run enterprises would all have easy access to – which raises some questionable implications around the privacy of the 1 billion users that make use of Ant’s Alipay and its financial services.
Shares of Alibaba also suffered on the back of news that Tencent and Alibaba are under pressure from the Chinese government to create a new state-backed digital currency to be called the electronic Chinese yuan (e-CNY). The new crypto would be in competition with Alipay’s existing digital payments network, and might pose a risk to the the platform’s impressive user base. Alibaba is likely to participate in the development of the digital currency either way, rather than risk being left out of the loop.
For Ant and Tencent, it's risky to encourage the development of e-CNY, but it's even more risky to stay on the sidelines. (Hopefully) by cooperating with the government, it might at least gain some influence and try to guide the design (of the digital yuan) in ways that won't reduce their competitive advantages too much,
said the former head of the International Monetary Fund's China division, Eswar Prasad.
Prices closed down a further 3% on Tuesday
Alibaba faces a crackdownAlibaba gets slapped with a $2.8 billion fine, but investors don't care and the stock shoots up just under 10% to close at its highest price since February 24 🤷♀️
Chinese regulators hit Alibaba with the fine following an anti-monopoly probe that reported the company had abused its market dominance, and the company will now have to ensure “comprehensive rectifications” take place. Reports surfaced in December 2019 that China’s State Administration for Market Regulation had opened an investigation into Alibaba over monopolistic practices, which sent stock down over 13%, making the latest price bump extra curious.
The accusation is that Alibaba used the technicalities of its platform to force merchants to pick one of two platforms, instead of being able to work with both, which restricts competition and shuts out other businesses. The probe resulted in a fine of about 4% of Alibaba’s 2019 domestic revenues. It’s the latest incidence of Beijing cracking down on internet giants after years of taking a fairly relaxed approach towards online, e-commerce and digital-finance spheres. But no longer. The burst of scrutiny on companies like Alibaba and Tencent is now one of the largest concerted actions against private enterprise in decades. Ali Baba founder Jack Ma’s financial arm Ant Group also faces having its valuation slashed by over two thirds amid new measures introduced in January to curb market concentration; and Tencent’s growing FinTech segment faces a real threat.
China’s record fine on Alibaba may lift the regulatory overhang that has weighed on the company since the start of an anti-monopoly probe in late December,
Bloomberg Intelligence analysts Vey-Sern Ling and Tiffany Tam said.