Shares of Chinese tech giant Alibaba (NYSE:BABA) are down more than 5% today on news the company is considering moving its headquarters to Singapore.
A leading e-commerce company that is often referred to as the “Amazon of China,” Alibaba has been based in Hangzhou, China since its founding in 1999. News that the company, which employs more than 250,000 people and also has interests in cloud computing and artificial intelligence, may move is sending shockwaves throughout China and pushing BABA stock lower.
Prior to today, BABA stock had declined 60% from its pandemic-era peak of $309 a share reached in October 2020. Today, the company’s stock trades for $111 per share.
What Happened With BABA Stock
According to multiple media reports, including from the South China Morning Post, Alibaba is reportedly building a new global headquarters in Singapore at a cost of $1.2 billion. However, a spokesperson for Alibaba has denied reports that the company is planning to move its global operations to the Asian city state.
Rather, Alibaba says it is developing a building in Singapore to provide office space for some of its businesses in Southeast Asia, notably the Lazada Group, one of the largest e-commerce platforms in all of Asia. Alibaba’s current global headquarters in China is a 450 hectare campus that includes eight office buildings, an exhibition hall, five canteens, four post offices, a barber shop and multiple cafes.
Why It Matters
These reports come after the e-commerce company founded and led by tech entrepreneur Jack Ma had several high-profile skirmishes with Chinese authorities over the past two years. Alibaba was targeted by regulators in Beijing as part of the Chinese government’s crackdown on publicly traded companies, notably technology firms.
In recent years, Alibaba had an initial public offering (IPO) of its Ant Group financial technology unit canceled, was hit with a record $2.8 billion antitrust fine and Jack Ma himself went into hiding for several months. BABA stock fell sharply throughout 2021 and 2022 as the crackdown on Alibaba intensified.
News of a potential headquarters relocation comes as Alibaba and its share price begin to recover from the government actions of the past two years. So far in 2023, BABA stock has risen more than 20%.
What’s Next for BABA Stock
It’s not clear if Alibaba will actually relocate its headquarters to Singapore and how Chinese authorities would react to such a move. But news that the company could be considering relocating is enough to send BABA stock down sharply on the day, suggesting investors either don’t like the decision or are nervous about the fallout caused by such a move. Proceed carefully with Alibaba stock for the time being.
On the date of publication, Joel Baglole 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.
