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Why Is Alibaba Stock Surging Despite $2.87B Antitrust Fine?

Benzinga2021-04-12

Shares of Alibaba Group Holdings jumped more than 8% on Monday in Hong Kong as investors cheered the record $2.8 billion fine slapped on China's biggest e-commerce company as a result of an anti-monopoly investigation and hoped it could be the end of the regulatory troubles for ace entrepreneur Jack Ma’s company.

What Happened:Alibaba CEO Daniel Zhang said on Monday he does not expect any material impact due to the change in regulatory exclusivity arrangement and that it will introduce measures to lower entry barriers and business costs faced by vendors on its platforms, Reuters reported.

An anti-monopoly probe on the company that was launched late last year was aimed at a practice that allowed merchants to list their products on only one of the two platforms rather than two.

Alibaba Vice Chairman Joseph Tsai told analysts on Monday that the company is glad that the scrutiny is over now,Bloomberg reported. The landmark probe into China’s e-commerce leader was wrapped in just four months, compared to years of investigations such cases could take in the United States or the European Union, the report noted.

Alibaba on Saturday said it had received China’s State Administration for Market Regulation’s decision for which it was under investigation since December and thanked the regulators for its support.

The size of the penalty was determined after regulators decided to fine Alibaba 4% of its 2019 sales of 455.7 billion yuan.

The $2.8 billion was based on just 4% of the e-commerce giant’s 2019 domestic revenue. It’s much more than the nearly $1 billion fine paid by the U.S. chipmaker Qualcomm Inc in 2015 but is far less than the maximum 10% allowed under Chinese law.

Why It Matters:China’s biggest e-commerce company came under the spotlight after its founder and outspoken business leader Ma’s public criticism of the country's banking sector as operating with that of a “pawnshop mentality." Shortly after, the company’s planned blockbuster Ant Group IPO plans were shelved.

Ma's Alibaba Group and other leading tech companies in China have been scrutinized by regulators over their growing influence in the country.  Technology firms in China have been hiring legal experts and setting aside funds for potential fines amid the antitrust and data privacy crackdown by regulators.

Price Action:Alibaba shares closed 2.16% lower at $223.31 in New York on Friday.

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Comment68

  • CynDEEEEEE
    ·2021-04-13
    hope it goes up in the coming days?? everyone’s rushing to buy now 
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  • darrentanjm
    ·2021-04-12
    Baba still far from fairly valued 
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  • Eaglewings
    ·2021-04-12
    Now they can move forward and focus on their business. 
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  • Firework peh
    ·2021-04-12
    yes, it's the time.
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  • GoG
    ·2021-04-12
    Good time to buy
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  • AhKeong
    ·2021-04-12
    Movement is considerably stable despite the fine. Would be expecting prices to inch up more in the coming weeks.  
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  • HaizCashAcc
    ·2021-04-12
    Buy?
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  • WayneLo
    ·2021-04-12
    Looks interesting now
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  • JustStonks
    ·2021-04-12
    Market doesn’t make sense anymore.... hahaha! Well, anyway just glad it adds some green to my portfolio! ??
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  • AdrianTan
    ·2021-04-12
    Easy answer = coz everyone expecting worse outcomes than just a fine
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  • LimLS
    ·2021-04-12
    At least they can put this behind them now. Hopefully no more pressure from CCP. Disclaimer : I'm vested
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  • _J_R_
    ·2021-04-12
    Buy tonight? 
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    • _J_R_
      Thanks for your advice LimLS
      2021-04-12
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    • LimLS
      wait a few days. everyone should be rushing to buy. let the market cools. just rambling my thoughts. do your own due diligence
      2021-04-12
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  • HKhin
    ·2021-04-12
    Hmm no chance to buy
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  • [驚訝] 
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  • ohty0308
    ·2021-04-12
    Seems like the worst is over?
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  • Wzhang
    ·2021-04-12
    Wonder whether to buy more shares
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  • Silverlitz
    ·2021-04-12
    A speedy resolution is good for everyone. Kudos to the Chinese government to conclude in 4 months instead of taking years.
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  • March_m
    ·2021-04-12
    They never say why?? 
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  • TizzyT
    ·2021-04-12
    Wow
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  • HermanL
    ·2021-04-12
    Good progress to move forward
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