Alibaba's market value of 800 billion has changed to 180 billion, and its market value has shrunk'Dry'。Since its listing on the New York Stock Exchange in 2020, Alibaba's share price has soared, reaching an all-time high of $320 and a market capitalization of more than $800 billion, making it one of the most valuable companies in the world. However, since November 2020, Alibaba's share price has started to fluctuate significantly, and as of December 13, 2023, the ** price is only 71$39, a drop of 78%, and the market value has shrunk to $181.8 billion, falling out of the top ten companies in the world by market capitalization. What is the reason for Alibaba's sluggish stock price?This article will analyze the following three aspects.
First, the pressure of policy supervision
Policy regulation is the most direct and important reason for Alibaba's stock price**. Here's what happens for each event.
November 3, 2020.
Reason: Ant Group's IPO was halted.
Stock price movement: from 299 on November 2$51 fell to 285 on Nov. 3$57.
Decline: 465%。
December 24, 2020.
Reason: The State Administration for Market Regulation (SAMR) has opened an investigation into Alibaba's "either-or" business practices.
Stock price change: from 256 on December 23$18 fell to $222 on December 2400 USD.
Drawdown: 1335%。
April 10, 2021.
Reason: The State Administration for Market Regulation imposed a penalty of 182 on Alibaba GroupA fine of RMB 2.8 billion.
Stock price movement: After the announcement of the fine, the stock price increased from 223 on April 9$31 rose to 241 on April 1268 USD.
Increase: 823% (note that this is the case of the stock price, not the event).
However, this does not mean that Alibaba's regulatory risks have been eliminated, but only temporarily alleviated. Since then, Alibaba has also been subject to a number of scrutiny and restrictions on data security, financial regulation, social responsibility, etc., resulting in serious restrictions and disruptions to its business development.
The impact of policy regulation is not only reflected in Alibaba's performance, but also in Alibaba's image. Once regarded as the leader and innovator of China's Internet, Alibaba enjoys a wide user base and social recognition, but under the crackdown of policy and regulation, Alibaba's reputation has been severely damaged, with the trust and loyalty of users declining, the morale and passion of employees declining, and the support and confidence of partners weakening. Alibaba's brand value and influence have also declined, affecting the valuation level of its stock price.
2. Competitive pressure
Competitive pressures are another important reason for Alibaba's share price**. Alibaba's main business is e-commerce, but in the e-commerce field, Alibaba faces fierce competition from multiple competitors such as JD.com, Pinduoduo, Meituan, Kuaishou, and Douyin. These competitors are not only eroding Alibaba's advantages in terms of market share, but also challenging Alibaba's position in terms of user experience, product innovation, and marketing strategies. Especially in the sinking market and social e-commerce, Alibaba's performance has significantly lagged behind its competitors, resulting in its growth momentum and potential being constrained.
Alibaba's other businesses, such as cloud computing, digital**, new retail, etc., are also facing competition from many strong competitors such as Tencent, Huawei, ByteDance, NetEase, etc. These rivals have strong technical strength and market positions in their respective fields, and Alibaba needs to make more investment and efforts to achieve breakthroughs and leadership in these fields, while also taking more risks and uncertainties. Alibaba's diversification strategy, while increasing its revenue** and room for growth, has also increased its operating costs and management complexity, which has affected its profitability and efficiency.
3. Market sentiment
Market sentiment is another important reason for Alibaba's share price**. Market sentiment refers to investors' expectations and confidence in the market, which affects investors' investment decisions and behaviors, and thus affects the trend of stock prices. Market sentiment is affected by many factors, such as the economic situation, political situation, social events, reports, guidance, etc. Over the past three years, Alibaba has faced a shift in market sentiment from extreme optimism to extreme pessimism.
Market sentiment refers to investors' emotional reactions to market movements, including confidence, fear, greed, pessimism, optimism, etc. Market sentiment is one of the important factors affecting stock price fluctuations, which can amplify or shrink the fundamental and technical aspects of the market, and even trigger irrational collective behavior, leading to overreaction or undervaluation of the market.
In October 2020, Alibaba's market sentiment peaked, investors were full of confidence and expectations for Alibaba's performance and prospects, and Alibaba's stock price also hit a record high. But in November 2020, with Ant Group's IPO halted, Alibaba's market sentiment began to crack, investors felt uncertain and worried about Alibaba's future, and Alibaba's stock price began to appear**. Since then, with the intensification of policy supervision, the increase of competitive pressure, the decline in performance, the negative impact of the epidemic, and other factors, Alibaba's market sentiment has gradually deteriorated, investors' confidence and loyalty to Alibaba have declined significantly, and Alibaba's stock price has also continued to fall. By December 2023, Alibaba's market sentiment had hit rock bottom, investors had almost lost hope in Alibaba's prospects, and Alibaba's stock price had fallen to a low point.
There are a few other factors:
Poor financial performance:Alibaba's latest earnings report showed that its revenue and net profit in the second quarter of fiscal 2022 (i.e., the third quarter of 2021) fell short of market expectations, with slower year-on-year growth and lower profitability, mainly due to increased investment in new business and merchant support initiatives12. In addition, Alibaba incurred significant non-recurring losses due to impairment of goodwill and changes in the fair value of equity investments34. These financial figures reflect Alibaba's operating pressures and risks, and also affect investor confidence and valuation.
Difficult to transform the business model:Alibaba is facing multiple business transformations from online to offline, from platform to content, from e-commerce to social networking, from China to the world, which require a lot of investment in capital, manpower, technology and time, as well as fierce competition and an uncertain market environment. In the process of Alibaba's transformation, it will inevitably encounter some setbacks and difficulties, which will also affect its short-term performance and earnings, resulting in fluctuations in its stock price and **.
Issues of Corporate Governance:Alibaba's corporate governance structure has some potential problems and risks, such as the excessive influence of founder Jack Ma, the opacity of the partnership system, the inequality of shareholders' rights and interests, the frequent related-party transactions, and the lack of internal control. These problems and risks may lead to Alibaba's decision-making errors, conflicts of interest, legal disputes, regulatory penalties, etc., and will also affect Alibaba's reputation and creditworthiness, resulting in a share price.
The above analysis of the reasons for Alibaba's stock price slump, what do you think about this incident?There are also suggestions on the recovery of Alibaba's stock price. Let's go down together.