Alibaba Stock Dips After Slow Growth Projections

Alibaba Stock Dips After Slow Growth Projections

Chinese E-commerce giant Alibaba’s stock dipped 4% in today’s trading at the Hong Kong Exchange after the company projected slower revenue growth.

Alibaba forecasted 2020 sales will grow by 27.5% down from 35% last year, citing economic uncertainties caused by the pandemic. The E-commerce company suffered a 6% drop in its stock price on the New York Stock Exchange.

While China is advancing in its recovery from the pandemic, it might take time before Alibaba recovers its sales fully.

According to Bloomberg, the company saw a comeback in online shopping in March. However, the sales are yet to pick up for the high-price items. So far, Alibaba has lost over $70 billion since the pandemic began.

SEE ALSO: Alibaba Debuts in Hong Kong Stock Exchange

The growing competition in e-commerce and the potential of Sino-American tensions to disrupt business are impossible to ignore.

The US Senate recently passed a bill requiring foreign companies to follow American audit standards, among other regulations. The bill, allegedly targets Chinese firms and could prevent the Asian companies from listing on American Stock Exchanges. Nasdaq and the NYSE host over 170 Chinese companies, including giants like Alibaba, Baidu, and JD.com.

In response, Beijing is vetting applications by Chinese companies to list on the LSE. Listing on the LSE, the next alternative after NYSE and Nasdaq will hedge against the adverse effects of losing US listing.

“Allowing Chinese companies to sell shares in London can be viewed as a gesture by China, further opening up its capital markets.” Forbes quotes Investment Manager Wu Kan.

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