Alibaba shares rally despite reports of massive fine
Alibaba’s US and Hong Kong stocks found themselves on higher ground, after US President Joe Biden signed a US$1.9 trillion stimulus bill into law.
- Alibaba Group Holding (NYSE: BABA) shares closed 2.77% higher on Thursday (11 March), in line with the wider US stimulus-driven tech stock rally
- Its Hong Kong shares (HKG: 9988) are also up 1.23% on Friday (12 March), despite reports that Chinese authorities are planning to impose a US$975 million fine on the e-commerce group
- Analysts see an upside of over 30% on Alibaba’s US stocks
- Trade Alibaba stocks, long or short, with an IG account
Alibaba could face huge fine
Alibaba Group Holdings could be slapped with a billion dollar fine by Chinese regulators, following an antitrust probe that started late last year.
China’s anti-competition authority, the State Administration for Market Regulation, is considering imposing a fine of over US$975 million on the e-commerce company, The Wall Street Journal reported on Thursday (11 March 2021).
The rumoured fine amount equals the highest fine ever paid in Chinese corporate history. In 2015, Qualcomm Incorporated paid US$975 million over anti-competitive practices.
In December 2020, China’s antitrust body announced that it launched investigations into the group. The announcement had followed the halting of its finance subsidiary Ant Group’s planned US$37 billion initial public offering on the Shanghai stock exchange in the previous month.
Alibaba share price: where next?
Despite the report, Alibaba’s Hong Kong shares are up 1.23% on Friday (12 March). Shares are trading at HK$230.20 each as at 14:10 HKT.
This follows its US listing, which closed 2.77% higher on Thursday, in line with the wider tech stock rally that had come on the back of the signed US$1.9 trillion fiscal stimulus.
In terms of outlook, the group’s US stock currently has a consensus rating of ‘buy’ from 28 analysts, according to the latest data from MarketBeat. It also has an average 12-month share price target of US$323, representing an upside of over 34% from the last traded price.
Last month, analysts from Citigroup, Raymond James, Mizuho, Macquarie and HSBC all boosted their price targets alongside ‘buy’ and ‘outperform’ ratings, after the company announced its December 2020 quarter earnings.
Raymond James analyst Aaron Kessler raised his firm’s target price to US$350 from US$330 while keeping a ‘strong buy’ call, citing the company’s ‘generally solid’ results.
Citigroup analyst Alicia Yap also raised price estimates to US$345 from US$316 with a ‘buy’ rating after Alibaba’s eventual December quarter results surpassed her expectations.
Alibaba’s NYSE stocks are up 5.7% year to date.
Ant Group IPO to happen eventually
In related news, Ant Group Executive Chairman Eric Jing also said earlier this month that the company will still go public at some point as planned, and that it would look for avenues to help employees monetise a portion of their shares.
Jing said in an internal staff memo that the company’s management is in the midst of reviewing its existing remuneration and incentive policy. Management is also working on a ‘short-term liquidity solution’ for employees expected to take effect in April 2021, The Wall Street Journal reported.
The report further added that the ‘liquidity solution’ in question is likely to be a share buyback programme, according to sources close to the company.
How to trade Alibaba shares with IG
Are you feeling bullish or bearish on Alibaba’s stocks?
- Create a live or demo IG Trading Account, or log in to your existing account
- Enter <Alibaba Group Holdings> in the search bar and select the instrument
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.