OT: BABA dips on signs of further regulation

BABA is back down near the bottom of its 3.5 month trading range on news that the Chinese government is gathering data on what exposure state run businesses have to BABA subsidiary Ant Financial. It was also reported that aPrior dips down to $112 or a little lower have seen bounces back up. Will the stock drop below that level of support

https://finance.yahoo.com/news/china-crackdown-risk-roars-ba…

"
“The events of the past 48 hours are a wake-up call that regulation isn’t finished,” said Michael Norris, an analyst with Shanghai-based consultancy AgencyChina. “We are going to be in a situation where the regulation and the slowdown in China’s economy happen side by side. It’s going to be challenging for businesses that rely on consumers and merchant advertising to be able to make this year’s numbers.”
"

Another story: https://finance.yahoo.com/news/chinese-tech-stocks-drop-crac…

"
The Hang Seng Index has more than halved from last year’s February peak with Beijing’s anti-monopoly campaign now into its second year.

The question is “how much large internet companies’ earnings will be impacted in the long-term if they are required to take increasing social responsibility,” said Jian Shi Cortesi, a portfolio manager at GAM Investment Management. There are not enough details currently to make a conclusion yet, she added.
"

Another story: https://finance.yahoo.com/news/1-china-asks-state-firms-0758…

"
Last month, China Cinda Asset Management Co Ltd, one of the four biggest state-owned asset management companies (AMCs) in China, announced the scrapping of a planned Ant investment.

Cinda scrapped the deal to buy a 20% stake worth about $944 million in Ant Group’s consumer finance arm because of pressure from state authorities, people with knowledge of the matter had said.
"

Mentioned in the one of the articles above was other news relating to Alibaba:

“the top state economic planner demanded Meituan and its peers lower the fees they charge restaurants in pandemic-hit regions…the latest demands placed on Meituan and food delivery peers like Alibaba’s Ele.me suggest they’re also getting pressed into national service, with uncertain longer-term implications.”

Alibaba is expected to report earnings Thursday 2/24 before market open. The market expects anemic revenue growth and significantly declining profit compared to a year ago as Alibaba copes with slowing growth of the Chinese economy, increased competition and declining margins and invests heavily to maintain and grow their business.

In the last 4 months BABA has traded down as low as 108.7 during the day but has closed no lower than 111.79. Today it’s traded down to $112.11 so far. It will be interesting to see if the current weakness takes the stock to a close below the support it’s found about 112 in recent months. I’m a bit tempted to lower my cost basis by buying more down here, but I guess I have as much as I want for the moment.

5 Likes

Whoops, sorry for the sloppy editing of the first paragraph. Cleaned up version below:

BABA is back down near the bottom of its 3.5 month trading range on news that the Chinese government is gathering data on what exposure state run businesses have to BABA subsidiary Ant Financial. Prior dips down to $112 or a little lower have seen bounces back up. Will the stock drop below that level of support on this news, or on the upcoming earnings report?

4 Likes