Stock to Watch in January: Alibaba
The dominant force of e-commerce, Alibaba, alongside other Chinese companies trading in the US market, closed 2020 under pressure due to the adoption of new laws that could result in being unlisted on American stock markets. Alibaba plays an important role in the Chinese economy. And thanks to its permanent double-digit percentage growth, it made shareholders feel happy until the end of November.
A scenario emerged where Alibaba took the biggest blow from its hometown. Chinese regulators are hurting digital payments to Ant Group, which owns a majority stake in Alibaba. The downside is that Alibaba and Ant Group are partners in payment transactions. Until the initial public offering (which many investors are excited about) moves ahead, the new cash flow for the e-commerce giant is not on the horizon.
One month after the investigation against Ant Group, Alibaba itself also came under scrutiny by the regulator. The government questions the restriction of Alibaba vendors from using other platforms as antitrust behavior.
It is too early to say how harsh the sanctions that could be imposed on Alibaba will be
As a result, Alibaba shares have lost nearly 30 percent of their value in the last weeks of the year, closing 2020 with just 10 percent increase.
The antitrust fever seems to be gaining momentum within other tech giants like Facebook and Google. Since the cases against these giants were an expected incident, they did not receive as much damage as Alibaba.
There are some concerns that unlike the US, the sanctions that the Chinese government will impose is a completely different story.
We think the decline in the shares of Alibaba, a major technology developer for China, is exaggerated. The company is an integral part of the economy and its rise. It is not in China's interest to permanently exclude its superstar.
Stock to Watch in January: Alibaba
Source:
https://www.fool.com/
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