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Chinese regulators put

Alibaba Group Holding

(Ticker: BABA) and other big tech companies announced last month that their business practices are being screened

On Thursday, China’s leading market regulator said it was examining Alibaba’s use of exclusivity agreements with merchants selling on its e-commerce platform and preventing them from selling through competitors like them

JDcom

(JD)

Investors reacted strongly to the news, pushing Alibaba down as much as 175% in U.S. Trading This is the largest percentage drop in the stock since going public in 2014. “We think it’s an overreaction,” Raymond James analyst Aaron Kessler told Barron

Alibaba confirmed the announcement by the state market regulator that China is under investigation under the Antimonopoly Act. Alibaba said it will cooperate with the investigation and that its business will “remain normal.”

Beijing also said it would meet with Alibaba entity Ant Group on financial regulations. Last month, Ant postponed its much-anticipated IPO In its own statement, Ant said, “We will seriously investigate and strictly adhere to all regulatory requirements make every effort to perform all related work ”

The sharp sell-off could surprise investors As in the US.Chinese regulators have taken a closer look at giant tech companies like Alibaba over concerns about their rising power on Google

alphabet

(TogetL) and

Facebook

(FB) are each facing several lawsuits because of their competitive practices

Last month, China released draft antitrust laws designed to prevent popular digital websites from using their position to induce traders into exclusivity agreements and other monopoly practices

Raymond James’ Kessler said the hard part will be quantifying revenue success, if any. And China’s regulators will likely pursue other companies, he said

Analysts estimate that Alibaba’s revenue will hit $ 106 billion in fiscal 2021, which ends in March, according to FactSet, which would be a 49% increase from fiscal 2020, and Kessler told Barron that the e- Commerce revenue for the industry grows 20% and Alibaba expects 24% growth in fiscal 2021. Alibaba’s practices “don’t seem to hurt competitors,” he said

Alibaba owns a third of fintech firm Ant, which raised $ 34 billion on deck when it went public last month but canceled its debut at the last minute after controlling shareholder Jack Ma came to a meeting with the Regulators had been invited

Executives from Ant to meet again with the regulatory authorities in the next few days The People’s Bank of China announced in a statement that the meeting “supports the Ant Group in the implementation of financial supervision, fair competition and the protection of legitimate rights and It is intended to guide consumer interests, “reported Reuters in China

In a note on Thursday, Kessler said, “The timing of the IPO remains highly uncertain” Ant might “be required to make concessions to the Chinese government and face tighter regulatory scrutiny”

Chinese regulators warned Alibaba Group Holding (ticker: BABA) and other major technology companies last month that their business practices are being screened

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Baba stock

World news – USA – Alibaba stock sinks through monopoly probe in China An analyst thinks the sell-off is an overreaction

Source: https://www.barrons.com/articles/alibaba-faces-a-crackdown-in-china-its-stock-is-sinking-51608831667