Alibaba Group’s Stock Price Drop: A Long-term Problem or a Bump in the Road?

Alibaba Group made headlines in 2014, when it became the biggest initial public offering (IPO) in US history. Yet, its stock price has since decreased to lower levels, …

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Alibaba Group made headlines in 2014, when it became the biggest initial public offering (IPO) in US history. Yet, its stock price has since decreased to lower levels, causing concern among some investors, whether the drop is going to be a long-term problem.

Alibaba Group’s starting share price stood slightly under $94 when it listed in September 2014. The shares are currently trading at around $77, with the stock suffering a dramatic drop during the last day of trading in May. The share dropped from above $80 to under $80 and the price has been in decline since.  Investors looking to trade in these markets should consider forex online trading in order to adjust for assets denominated in foreign currencies.

A Long-term Problem?

The slump in price started as the SEC announced it will investigate the firm’s annual “Singles’ Day” sale. According to the reports, the SEC is looking into the reporting from the last year’s sales. The Alibaba platform reportedly sold over $5 billion worth of goods on the day in just the first 90 minutes of the big sales day.

But regulators are examining whether the numbers were inflated by Alibaba and if the goods sold on the site included pirated and fake products. Alibaba is said to be co-operating with the investigators, yet investors have reacted by sending the stock price into a downward spiral.

A Bump in the Road?

Yet, the most recent news suggests there’s still more left in the tank for the stock. Singapore state funds, Temasek and GIC, bought $1 billion in Alibaba stock, which has seen the stock trade slightly higher.

The company has also begun investigating the counterfeit problem more seriously. It recently hired Apple’s former investigator Matthew Bassiur to look into the issue. It has also plenty of other ventures going on, which might provide more long-term security. Its sale growth is, for instance, increasing at a generous rate. But the SEC investigation could prove fatal for the company’s stock and it’s likely the price will remain jittery in the meantime.

 

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