Alibaba stock recovers - Expert Commentary - Dukascopy Bank
Wed, 30 Dec 2020 12:27:19 GMT
Source: Dukascopy Bank SA
On December 24, the stock price of Alibaba plummeted and reached a low level, which made up a total loss of 17.24% or $44.02 per share.
The drop initially was caused by the Chinese government regulators announcing that they are investigating the company in regards to unfair pricing.
By the start of Wednesday's, December 30, US trading hours, the stock price had recovered almost 12%. This occurred initially due to market participants buying the dip of a stock, which by many analysts is seen as one of the best long term investments.
Moreover, the stock was expected to continue to surge, as prior to the market opening, the regulators announced that they would fine the company. The total fine amounted to 500,000.00 Yuan, which is only $76,656.55. This amount is insignificant to the company.
Namely, initially expected losses because of a fine and changes to the company that could occur due to new rules by the regulators caused a sell off. Today, it is clear to the market that the fears were unfounded and the company's stock has the previous intrinsic value.
In addition, at the time of writing the article, Alibaba had not even provided comments on the case.