Alibaba Stock Forecast: BABA shares plunge 10% on fears of being delisted like DiDi Global

Alibaba stockholders are worried the stock will be delisted in the US like DIDI.
BABA stock has fallen 65% since its all-time high.
DIDI hopes to relist shares in Hong Kong.

Clay Webster FXStreet

Alibaba (BABA) is feeling the weight of other US-listed Chinese stocks as ride hailing company DiDi Global (DIDI) announced it would attempt to delist its shares from the New York Stock Exchange on Friday. Shares careened more than 10% lower, dropping under $110. BABA stock was down more than 3% in Friday's premarket ahead of the open, demonstrating that institutional investors may have more faith than retail.

Alibaba (BABA) Stock News: The DiDi effect

On Friday morning, DiDi announced the policy of delisting on its Weibo account. "Following careful research, the company will immediately start delisting on the New York Stock Exchange and start preparations for listing in Hong Kong," the post read.

Shares of the rider hailing king of China sank 9% in the premarket. Chinese regulators have been pressuring DiDi executives to delist the shares since November after bringing their weight to bear immediately after the stock had its New York IPO five months ago, according to Reuters. DIDI shares fell 8.2% to $7.16 at the open on Friday.

As soon as the stock debuted on the NYSE at the end of June, Chinese government officials barred DiDi's suite of apps from accepting new customers.

DiDi said it hopes to move the shares to another exchange but added that it would hold a vote to determine a strategy with US shareholders.

Alibaba is of course caught in the crosshairs as it has one of the most popular US-listed American Depository Shares (ADRs). Since its IPO in 2014, Alibaba has been a darling of Wall Street and US hedge funds. Since CEO Jack Ma ran afoul of Chinese regulators back in October of 2020, its former subsidiary ANT financial had its IPO cancelled and BABA stock has lost 65% of its value.

BABA key statistics

Market Cap	$362 billion
Price/Earnings	19
Price/Sales	3
Price/Book	2
Enterprise Value	$313 billion
Operating Margin	13%
Profit Margin	15%
52-week high	$274.29
52-week low	$110.79
Short Interest	2%
Average Wall Street Rating and Price Target	Buy, $213.23

Alibaba (BABA) Stock Forecast: BABA could fall to $87 if it does not hold at $109

BABA stock price is now at a four-and-a-half year low near $111 in the early part of Friday's session. It is now trading for just three times revenue.

With this much fear permeating markets, Chinese ADRs will be in the dog house for some time. Of course, there is support at $109, all the way back from September 2016. Below here support only comes in at $87.

FXStreet view: Anything could happen. We do not recommend going long, because even though the stock is immensely undervalued (forward price-to-earnings around 15 for a stock with 20%-plus forward revenue growth), worries and sentiment have made it a pariah. If you are already a shareholder, cling on for dear life.

BABA 1-day chart

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Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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