The shares of Alibaba Group Holding Ltd. fell on Thursday to the lowest close in nearly six months, after Chinese regulators launched an antitrust investigation into the e-commerce giant.
One of the focuses of the investigation was Alibaba’s policy of “choosing one of two,” which requires Alibaba’s business partners to avoid dealing with competitors, the Associated Press reported.
“[W]We are not surprised by the announcement of the investigation, “analyst Aaron Kessler wrote to Raymond James in a note to clients. “We believe the most likely outcome is the termination of these exclusive relationships, although it is difficult to quantify the potential impact of revenue (e.g., consumers switch purchases to other platforms).”
Kessler reiterated the strong purchase rating it had at Alibaba at least since February 2018.
Alibaba shares BABA,
fell 13.8% in morning trading operations and headed for the lowest close since July 1st. The shares are expected to suffer the biggest one-day decline since it went public in September 2014, as the current record drop is 8.8% on January 29th. , 2015.
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With the sale, shares have crossed into bearish territory territory, which many at Wall Start point to as a 20% or more drop from a significant peak. Shares were currently 30.4% below their record close.
Since closing with a record $ 317.14 on Oct. 27, shares closed up 19.6% to $ 255.11 on Dec. 15, before matching some losses to close on Wednesday at $ 256. $ 18. A close of $ 253.71 or less would make the bear market “official.”
Kessler said he believes that given the sharp decline in shares relative to their record high, investors are already “largely pricing” concerns over an investigation. As a result, “we remain buyers” of Alibaba’s shares at current levels, he said.
Kessler has a target price of $ 330 in Alibaba shares, which is 49.5% above current levels.
Shares have fallen 18.2% over the past three months, while the fund traded on iCHhares MSCI China MCHI stock exchanges,
gained 8.2% and the S&P 500 SPX index,
has gained 13.9%.