Alibaba (NYSE:BABA) stock is falling 2%. The retreat comes after a Chinese regulator refuted a report that Beijing was moving toward allowing a subsidiary of BABA stock to carry out its long-planned initial public offering (IPO).
Since October 2020, the Chinese government has blocked Ant Group from implementing its planned IPO. Alibaba has a 33% stake in the company, which specializes in fintech. As a result, Alibaba has a vested interest in the completion of the Ant IPO.
The Fluctuations of BABA Stock
Bloomberg reported this morning that Chinese authorities had recently appointed a group of people to reassess Ant’s IPO. BABA stock jumped 7% in pre-market trading after that story was published. Subsequently, however, the China Securities Regulatory Commission refuted that report, and Alibaba’s shares dipped into the red.
However, the commission did clarify it is in favor of Chinese internet companies carrying out IPOs in foreign countries.
In the last several days, optimism toward Chinese stocks in general and Alibaba in particular has surged. Among the factors behind the rebound were China’s decision to approve 60 new video games and the easing of Covid-19 mitigation measures in Beijing. The sentiment was also driven by the relaxation of punishments previously imposed on ridesharing company Didi Global (NYSE:DIDI).
Between the market close on Friday and the close of trading on Tuesday, Alibaba’s shares surged nearly 20%. Then, they jumped another 15% on June 8.
In addition to the denial of Bloomberg’s report by government officials, new coronavirus restrictions are being imposed in Shanghai and weighing on Chinese equities today. The city hosts many of the country’s largest financial companies.
A Bearish Analyst
Earlier this week, Manuel Muehl, an analyst at Germany’s DZ Bank, kept a “sell” recommendation on BABA stock. The analyst contended that investors’ more upbeat view of the shares was “a bit premature.” He remains bearish on Chinese internet names, citing the deceleration of their growth last quarter. Muehl maintained an $85 price target on Alibaba.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.