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Vladimir Zernov
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U.S. Stock Market

Alibaba Video 12.04.21.

Alibaba Stock Gains Ground After A Record $2.75 Billion Fine

Shares of Alibaba gained strong upside momentum after Chinese regulators imposed a $2.75 billion fine on the company. Regulators accused Alibaba of violating anti-monopoly rules. The fine of $2.75 billion was calculated as 4% of the company’s 2019 revenues. Alibaba has already stated that it accepted the penalty and will comply with regulators’ demands.

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Alibaba faced problems after Jack Ma criticized China’s regulators in October of 2020. Soon after Ma’s speech, IPO of fintech Ant Group was stopped, while Alibaba found itself under increased regulatory scrutiny.

Regulatory uncertainty put material pressure on Alibaba’s stock in 2021, and the company’s shares were down by about 4% year-to-date before today’s trading session despite the general bullish mood in the markets.

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What’s Next For Alibaba?

The fine of $2.75 billion is not a material problem for a company with a market capitalization of more than $600 billion. In addition, the fine may mark the end of Alibaba’s problems, at least in the near term.

In this light, today’s strong performance of Alibaba’s shares is not surprising. Currently, the stock is up by about 8%, and it has decent chances to continue the upside move in the upcoming trading sessions.

Before the crisis with the Ant Group’s IPO, Alibaba shares were trading near the $310 level. If the market decides that the company’s problems are over, Alibaba shares will attract buyers who are willing to buy them at a significant discount to 2020 highs.

At the same time, traders will closely monitor news about Ant Group. China has recently directed Ant Group to register as a financial holding company, which will put it under regulation for financial companies. Jack Ma’s problems started after he stated that Chinese regulators hurt innovation, but now Ant Group will have to comply with stricter financial regulations.

For a look at all of today’s economic events, check out our economic calendar.

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