Alibaba’s Wipeout

Alibaba’s Wipeout
Reda Farran, CFA

over 2 years ago1 min

Mentioned in story

Alibaba has lost a colossal $344 billion in market capitalization over the past year which, as the chart above shows, is the biggest wipeout of shareholder value globally.

The Chinese tech titan’s stock price has fallen by around 45% over the past year, joining other Chinese stocks affected by a widespread government crackdown on some of the country’s fastest-growing sectors. So it’s not exactly surprising to see that many of the companies in the chart above also happen to be Chinese. Alibaba has had a particularly bad time as the Chinese government steps up its scrutiny of the company’s practices and demands a breakup of its fintech business.

But the recent sell-off is being viewed as an opportunity by some investors, pushing them to become more optimistic about Alibaba and Chinese stocks in general. This month alone, investment banks including HSBC, Nomura, and UBS all turned positive on the country’s stocks. Investment firms BlackRock and Fidelity International, meanwhile, have been bargain-hunting in the Chinese stock market since the summer.

The rationale for investors right now is that things can’t get much worse – or that markets are as cheap as they can be, and are already pricing in a slowdown in the property market, weaker economic growth, and more government crackdowns. But time will tell if this newfound optimism turns out to be correct or entirely misplaced…

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