Alibaba’s gains from primary listing plan wiped out in two days

The e-commerce giant’s stock fell as much as 1.5% in Hong Kong on Thursday after tumbling on Wednesday, dipping below the level before Alibaba said it would seek a primary listing in the city.
Image: Gilles Sabrie/Bloomberg

The euphoria surrounding Alibaba’s primary listing plan has evaporated in just two sessions, as focus shifts to the firm’s earnings announcement due next week.

The e-commerce giant’s stock fell as much as 1.5% in Hong Kong on Thursday after tumbling on Wednesday, dipping below the level before Alibaba said it would seek a primary listing in the city. Goldman Sachs Group Inc. said the move may draw $16 billion of inflows into the company’s shares.

The drop in the share price is a reminder that sentiment toward Chinese tech shares remains fragile as investors seek clues on the earnings outlook while trying to gauge whether a yearlong crackdown on the sector is drawing to a close. A recent rebound in internet stocks has fizzled out after new punitive measures damped sentiment.

“Investors turn their viewpoint on macroeconomic outlook of China and company’s earnings,” said Banny Lam, head of research at CEB International Investment Corp. “The recent housing crisis, weak 2Q 2022 GDP growth and global monetary tightening environment cloud China’s 2H 2022 growth outlook and company earnings.”

In results due August 4, Alibaba is expected to report its first-ever negative quarterly revenue growth amid a slowdown in the Chinese economy and fierce competition. The company refrained from providing a full-year revenue forecast when it released its earnings in May, citing the uncertainties caused by the virus outbreak.

Alibaba may announce a 0.9% drop in revenue for the quarter ended June from a year earlier, a sharp reversal from the 9% gain posted in the previous three months, according to analysts’ estimates compiled by Bloomberg.

© 2022 Bloomberg

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