BABA Stock: Alibaba Rises From Deep As Restrictions Ease

In yet another signal that restrictions on Alibaba Group Holding (BABA) by Chinese authorities are easing, a $1 billion fine on the company’s Ant Group fintech unit might be cut to $700 million, a news report said Tuesday. BABA stock initially rose then fell on the news.

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The fine reduction is set to be announced in the coming months, according to Reuters.

BABA stock, which initially popped more than 2% on the news, gave it all back. Shares slipped 1% to close at 95.49 on the stock market today.

China Regulators Quash Ant IPO

China initially put the hammer down on China internet companies in late 2020.

It did so when Chinese authorities derailed a planned $37 billion initial public offering by Ant Group, controlled by Alibaba Founder Jack Ma, the company’s former chairman. It was one of many harsh restrictions on the large China internet firms.

The moves not only hit BABA stock, but tackled Tencent Holdings (TCEHY), JD.com (JD) and Baidu (BIDU), among others. China authorities used the restrictions to prevent what it called monopolistic powers by these and other companies.

In January, however, Chinese regulators said Ant Group could raise $1.5 billion for its consumer finance unit, widely seen as an important step forward toward an eventual IPO. Ant Group operates the popular consumer finance app called Alipay.

BABA Stock Jumps As China Cuts Restrictions

The ending of the clampdown on the internet sector came as Ma agreed to cede controlling rights of Ant. BABA stock soared 13% on the news.

Then on March 28, Alibaba sent shockwaves into the Chinese tech sector by announcing plans to split into six units. The units will operate independently and are free to raise funds and explore initial public offerings.

In addition to BABA stock, Tencent Holdings dropped 1.5% to 46.50

Also, Baidu edged down 0.3% to 131.18 and JD dipped 0.8% to 37.73.

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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