what happened
Shares of Alibaba Group (NYSE: BABA) jumped 9.3% on Monday after the Chinese e-commerce leader announced a settlement regulation.
Approximately
Alibaba was fined $ 2.8 billion as part of a monopolistic investigation. According to the Chinese State Administration for Market Regulation (SAMR), traders have restricted the use of competitive platforms without just cause. Regulators have also instructed Alibaba to improve its internal controls to promote fair competition on its e-commerce sites.
Alibaba Group’s share rose on Monday. Image Source: Getty Images.
Many investors were relieved that the fine was not greater or that the penalty was worse. The fine pays equal to 4% of Alibaba Group’s local revenue in 2019. Chinese law provides for a maximum fine of 10% of revenue. In addition, there were no sales requirements or major structural changes to Alibaba’s business.
Now what
Wall Street says the fine could enable Alibaba to put its regulatory issues behind it. Several analysts, in turn, made strong comments on Alibaba’s share.
JPMorgan analyst Alex Yao, for one, reiterated his overweight rating on his shares. He sees Alibaba’s share price rise to $ 320, or about 31% higher than the closing price on Monday. “The event will serve as a conclusion to investors’ concerns about Alibaba’s core risk regulatory risks,” Yao said.
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