Alibaba Stock Sinks on Contract Suspension, Downgrade

Year-to-date, BABA has shed nearly 50%

Digital Content Manager
Dec 22, 2021 at 10:26 AM
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Chinese e-commerce name Alibaba Group Holding Ltd (NYSE:BABA) is down 4.3% to trade at $117.74 this morning, following reports that China has suspended a contract with subsidiary Alibaba Cloud Computing. Regulators accused the company of failing to address a cybersecurity vulnerability, amid mounting pressures from the Chinese government on the country's private tech sector.

Also weighing on the security is a downgrade from Atlantic Equities to "neutral" from "overweight." The firm, who also slashed its price target to $140, said it doesn't expect near-term growth for shopping platforms Tmall and Taobao. Analysts were optimistic towards BABA coming into today, though, with 14 of the 16 in question calling it a "buy" or better. Plus, the 12-month consensus target price of $209.86 is a whopping 79.8% premium to the equity's current perch.

Alibaba stock was breaking lower the last time we checked on it, which is on par with the trajectory it has traced for most of the year. More recently, the descending 20-day moving average has pressured the shares, despite their newfound floor at the $15 level. Year-to-date, BABA has shed 49.8%.

In the options pits, the stock's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 95% of readings from the last year. In other words, though calls are still winning out on an absolute basis, the options pits have been much more bearish than usual. 

 

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