Alibaba Stock Plummets on Delisting, Covid-19 Fears

The equity carries a more than 66% year-over-year deficit

Digital Content Manager
Mar 15, 2022 at 10:24 AM
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Alibaba Group Holding Ltd (NYSE:BABA) is in the spotlight, after the Securities and Exchange Commission (SEC) last week sparked delisting fears when it spotted at least five Chinese companies that are not in compliance with the Holding Foreign Companies Accountable Act (HFCAA). Though the e-commerce giant has moved towards becoming dual-listed in Hong Kong, China's worst Covid-19 outbreak since 2020 is also weighing on shares. At last check, BABA is down 5,1% to trade at $73.80. 

Digging deeper, the equity has been on a steady decline, shedding more than 13% last week, and now trading at fresh five-year lows. Shares also breached a floor at the $110 level in late February, which had contained multiple pullbacks since December, as the 10-day moving average guides the stock lower. Year-over-year, BABA has dropped 66.9%.

Analysts remain bullish towards Alibaba stock, with 10 of the 12 in question carrying a "buy" or better rating, while the 12-month consensus target price of $186.48 is a 143.9% premium to current levels. Should some of this optimism start to unwind, BABA could go even lower. 

Drilling down to today's options activity, 22,000 calls and 18,000 puts have already been exchanged, which is double the volume that is normally seen at this point. Most popular is the April 90 call, followed by the March 70 put, the latter of which expires at the end of the week.

 

 

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