What happened
Actions of Alibaba Group Holding Limited (NYSE: BABA) they are recovering today from a historic settlement that saw the shares of the Chinese e-commerce titan lose 30% of its value in just two months. As of 10:55 EST, Alibaba’s shares rose 6% from yesterday’s multi-month low.
And
Suffice to say that this is a curious development on a day when Wall Street Newspaper reported that “regulatory risks” were extending a “Christmas Eve settlement” on Alibaba and described how the cancellation of a planned IPO of Alibaba’s Ant Group subsidiary and an antimonopoly investigation in China cost Alibaba $ 273 billion in capitalization to market in just a couple of months. Citing analysts, the diary warned that pressure is “intensifying” on both Alibaba and Ant, and that regulators have instructed the latter “to refocus on its original payments business” and to stop expanding into new – and more profitable – areas of business, such as loan origination.
That said, even the diary admits that investors may be overreacting to regulatory fears and that “it is not in China’s interest to break up or destroy such a profitable company”.
Image source: Getty Images.
What now
And that may be the sentiment that is raising Alibaba’s shares today.
As TheFly.com reports today, Truist Financial (the former BB & T) has just published a note analyzing how much Alibaba can be worth based on a “sum of parts” assessment, in the case of It’s broke. The analyst concluded that such a split is “unlikely” and that even if it did, a broken Alibaba would still leave its shareholders in possession of parts worth at least $ 294 in total – and therefore 25% more than the stock in the Alibaba is currently being sold.
The analyst further noted that Alibaba is so important to the Chinese economy now that it has become a “must” for buyers and will therefore remain very profitable, whether divided or not. It is based on this assurance, it seems, that Alibaba investors have returned to buy the shares today.