Alibaba Stock News and Forecast: BABA falls to low $90s on delisting worries

• SEC announced the non-compliance and possible delisting of five Chinese stocks.
• BABA shares dropped another 7.9% on Thursday along with other plunging Chinese ADRs.
• JD.com beat EPS estimates and matched revenue expectations but shares dropped 15.8%.

Alibaba stock (BABA) fell 7.9% to $92.92 on Thursday after the US Securities & Exchange Commission (SEC) announced the possible delisting of five Chinese companies that trade as American Depositary Receipts (ADRs) on US exchanges. Additionally, Chinese competitor and fellow ADR JD.com (JD) dropped nearly 16% despite a decent earnings report.

Alibaba Stock News: Delisting fears resurface

The SEC pinpointed Yum China (YUMC), ACM Research (ACMR), BeiGene (BEIGF), HutchMed (HCM) and ZaiLab (ZLAB) as Chinese equities that have failed to provide the SEC with financial audits. This goes against the Holding Foreign Companies Accountable Act, which stipulates that foreign stocks on US exchanges cannot go three years without providing audited financial information to the SEC. The law in China says that these same companies must keep their audits within mainland China.

In a translated press release, the China Securities Regulatory Commission said, "We have made our position on the implementation of the [Holding] Foreign Companies Accountability Act on many occasions before. We respect the supervision of relevant accounting firms by foreign regulatory authorities in order to improve the quality of financial information of listed companies, but we resolutely oppose the erroneous practices of some forces to politicize securities supervision."

On Friday Citi sent a note to clients saying the SEC announcement was creating "worries that more companies will be put on the [US] list in the coming months."

JD.com reported adjusted earnings per share (EPS) of $0.35 cents on revenue of $43.6 billion. EPS was ahead by $0.08, and revenue beat estimates by about $300 million. Revenue grew by about 23% YoY, however, which was the slowest rate of growth in six quarters. This is significant since Alibaba's revenue growth slowed in the fourth quarter as well. The thinking goes that if Alibaba's sleeker, younger competitor is slowing as well, then there may not be much Alibaba's managment can do to accelerate the ecommerce giant's growth trajectory.

The Chinese government is forecasting GDP growth of 5.5% in 2022, which is far lower than the 8.1% figure seen in 2021.

Alibaba Stock Forecast: No sleep until $86

BABA stock breaking through psychological support at $100 is key. Now $86 is the only real support available. $86 seems like the last source of comfort for BABA, which has remained below major moving averages for months, only occasionally making above short-term moving averages. There has not been a bottom in this stock for 16 months. $86 served as support back in late 2016, and the continuance of poor headline after poor headline has brought them here. Making it back above $109.76 will restart a bullish trend.

BABA 1-week chart