Alibaba looks to move past its regulatory issues - The Average Joe

    Alibaba looks to move past its regulatory issues

    Victor Lei — Head of Research

    October 20, 2021

    alibaba

    October 20, 2021

    Alibaba — the Amazon of China — is up 27% in the past two weeks with signs its fortunes are changing for the better.

    What’s the big deal? Alibaba has the largest e-commerce and cloud computing business in China but Chinese regulations took BABA down along with the Chinese tech industry.

    After a $2.75B fine for anti-monopoly violations and a 40% stock price drop from its peak last October, BABA’s outlook might be finally changing — with positive news for once:

    • Baba is expanding its cloud business into other Asian countries (i.e. Singapore, Indonesia) — competing with Amazon and Microsoft.
    • After staying low for months with the media questioning his safety — Jack Ma reappeared in public in September and is now traveling outside of China again.

    Bend the knee: In the past year, the Chinese government ordered China’s internet giants to open their platforms up to competitors and investigate data security and consumer rights issues. And obeying they are…

    • Companies are donating billions to support China’s common prosperity campaign — with Alibaba spending $15.7B by 2025.
    • According to one Chinese central bank official — about half of the ~1,000 financial problems found on internet platforms — are resolved (via WSJ)

    Invisible handcuffs: Alibaba, at risk of angering the Chinese government, may be cautious about aggressive growth moving forward. Keep an eye on these:

    • 📉 Domino effects of a potential bankruptcy from China’s largest property developer, Evergrande — growing to be China’s biggest problem.
    • 📈 Baba expanding its cloud business, which is less impacted by consumer spending, is a good sign for investors.

    Must-read: Chinese tech valuations are so cheap, it’s hard not to look at their stocks.

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