Why Alibaba Stock Was Sinking Today - The Real Story Behind the Plunge
Alibaba shares took a nosedive as investors scrambled for the exits. The Chinese e-commerce giant faced perfect storm conditions that sent its stock tumbling.
Regulatory Headwinds Bite Hard
Beijing's latest crackdown on tech giants rattled markets. Fresh restrictions on data handling and antitrust measures created uncertainty across the sector.
Earnings Miss Sparks Sell-Off
Disappointing quarterly results revealed slowing growth in core business segments. Revenue projections fell short of analyst expectations by double digits.
Global Macro Pressures Mount
Rising interest rates and inflation concerns hit growth stocks particularly hard. Institutional investors rotated out of tech into safer assets.
The downturn highlights how traditional equity markets remain at the mercy of central bank whims and regulatory whims—meanwhile, decentralized assets continue operating 24/7 without asking for permission. Because nothing says 'investment security' like watching your portfolio swing on every Fed chairman's eyebrow raise.
Fairly valued after rally
Well before the market open Thursday, US Tiger Securities' Bo Pei changed his Alibaba recommendation to buy from hold. Counterintuitively, this was accompanied by a price target raise to $180 per ADR from the pundit's previous level of $145.
Image source: Getty Images.
Also rather counterintuitively, Pei's move comes just after Alibaba made several announcements about a stronger push into artificial intelligence (AI) technologies. Among other items, it said it WOULD open new data centers to help stream AI functionalities, and trumpeted a fresh partnership with cutting-edge U.S. chipmaker.
According to reports, the analyst's adjustment derives from his belief that with the recent bull run of the ADRs, Alibaba's potential has been priced into its equity. This exposes the value of the ADRs to short-term, downside risk.
No longer an irresistible discount
The analyst added that previously, one great appeal of Alibaba's ADRs were their significant discount to roughly comparable U.S. tech stocks. This has essentially been erased by the recent run-up in price. While Pei expressed admiration for the company's performance and its future-forward strategy, he thinks its current price basically reflects this.
