Alibaba's nightmare year: half of its value is left on the stock market in 2021

1. elEconomista.es

The corporate giants do not always march to the general rhythm of the markets. As most global stock markets post double-digit gains so far this year, e-commerce leviathan Alibaba sheds more than half of its market value in 2021. China's pressure for big corporations to leave Wall Street It is just the latest of the headwinds that the price of Alibaba has suffered throughout the year.

The constant influence of the Chinese government has been hurting the company's shares. The founder, Jack Ma, once extolled as an example of entrepreneurship in the Asian giant and the richest person in the country, announced his departure from the company in 2018 and the rumors that it was the regime that forced him to step aside were immediate. . Subsequently, Ma criticized the Chinese economic system and disappeared between October 2020 and January 2021. The company has failed to come back on the stock market since then, having set intraday record highs of $319.32 per share. Since then 60% of its value has been left.

Although November has been its worst month of the year , with a drop of 22.68%, another three months of the year suffered double-digit declines, between 11 and 14% from July to September. Only four months of the year has it managed to end positively, just the opposite of 2020, when there were four months in which its shares were devalued. Its current capitalization amounts to 339,000 million dollars , being number 25 in market value worldwide, far from the 800,000 million it marked in October of last year.

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Fines, disappointing accounts and uncertainty

Bad news has been happening throughout the year. In April, Alibaba was fined by China to pay 18 billion yuan (more than 2.3 billion euros) in an antitrust fine that forced it to cut costs for merchants who want to use its platforms and lower the price of its technology services. Shortly after, Ant Group, a subsidiary of Alibaba, had to restructure its future plans after its IPO operation was stopped by the regulators of the Asian country, becoming a financial holding company supervised by the Chinese central bank.

In May, the company presented its first quarterly losses in the last nine years when having to face the fine. Thus, 5,479 million yuan (702 million euros) were left between January and March, its last quarter of the fiscal year. Despite this, the year ended with a year-on-year improvement in profit of 0.7% and an increase in revenue of 64%.

But the arrival of his new fiscal course did not improve the accounts. Between April and September it suffered a year-on-year drop of 81% in profits, which they justified by their investments in portals such as Taobao Deals or Lazada. In addition, he predicted a drop in revenue , limiting growth for the year to a range of between 20 and 23%. The next presentation of results is scheduled for February 2022.

In recent weeks, the announced change in the financial management has not brought tranquility to the price of the title either. The current incumbent, Maggie Wu, will step down on April 1, 2022 after 15 years with the company. her to be replaced by deputy chief financial officer, Toby Xu.

Currently, the economic war between the US and its great Asian rival has landed on the stock markets. Trump had already been threatening since 2019 to expel Chinese companies that do not meet accounting standards from the American stock market . American regulators followed through on the threat in early 2021 by kicking three Chinese telecommunications companies off the floor and have stepped up their opening requirements this month. For its part, pressure from China has already led the transport giant DiDi to leave the New York Stock Exchange , plummeting 22% in the session in which the news was released. The fear of investors is that Alibaba is next, given the dynamic that the Xi Jinping Executive seems to have taken with large corporations in recent months.