Alibaba Added to SEC Delisting Watchlist. One More Reason the Stock Is Slumping.

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Shares of

Alibaba
,
the Chinese e-commerce giant, fell sharply Friday. The latest reason: It was added Friday to a list of Chinese companies that face possible delisting from the Securities and Exchange Commission.

U.S. regulators have threatened the delisting of foreign companies if they don’t comply with U.S. accounting standards. The Wall Street Journal noted that more than 250 Chinese companies including Alibaba face U.S. delisting if the two countries can’t reach an agreement for U.S. regulators to review the financial audits of Chinese companies.

Alibaba

(ticker: BABA) shares have had a rough week. They dropped Thursday following a report that said billionaire Jack Ma plans to cede control of Ant Group.

Alibaba owns about a third of Ant, the fintech powerhouse. The Wall Street Journal reported Thursday that Ant was looking to distance itself from Alibaba, which Ma founded, after a prolonged period of regulatory pressures.

The Journal noted how diminishing Ma’s ownership in Ant could push back a potential revival of the company’s initial public offering for a year or more. Ma currently controls 50.52% of Ant shares. The Shanghai Stock Exchange suspended Ant’s IPO of more than $34 billion in November 2020.

Meanwhile, Alibaba is forecast by analysts to report a decline in quarterly revenue when it reports Aug. 4. It would be the company’s first-ever negative quarterly revenue growth, according to Bloomberg. Analysts surveyed by FactSet expect revenue of $30.2 billion for the quarter ended in June, down from $31.8 billion a year earlier.

Alibaba shares have slumped since Tuesday after the company said it would apply for a primary listing in Hong Kong. The listing is expected to be completed before the end of 2022. Alibaba would become a dual-primary listed company in Hong Kong and New York, where American depositary shares of the company trade.

Those ADRs closed Tuesday at $101.44. In trading Friday, they were down 9.3% to $91.25. Hong Kong-listed shares of Alibaba on Friday closed down 6.1%.

Write to Joe Woelfel at [email protected]