BABA Stock Forecast: Alibaba Group tumbles as China reinstates COVID lockdowns in Beijing

NYSE:BABA fell by 10.31% during Monday’s trading session.
China reinstates COVID lockdowns after an outbreak in Beijing.
JPMorgan remains bullish on AliBaba despite recent weakness in the stock.

Stocks Reporter FXStreet

NYSE:BABA tumbled alongside other Chinese ADR stocks on Monday as investors received another round of bad news out of the nation’s capital. Shares of BABA plummeted by 10.31% and closed the trading day at $98.52. The fallout from the May CPI report extended into this week as global equities markets tanked to start the week. All three major US indices closed well lower, with all 504 constituents of the S&P 500 trading in the red at one point this morning. The Dow Jones dropped by a further 876 basis points, the S&P 500 re-entered bear market territory with a 3.88% loss, and the NASDAQ led the way lower posting a 4.68% loss during the session.

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Just weeks after Shanghai reopened from its disruptive COVID-lockdowns, China has announced that Beijing is now closed due to an outbreak of the virus. The news comes as Chinese ADR stocks looked to be turning a corner following months of lockdowns directly affecting businesses. Some of the companies that were impacted include Tesla (NASDAQ:TSLA) and Nio (NYSE:NIO) as production facilities in the Shanghai region were shut down.

BABA stock price

Despite the recent weakness in AliBaba’s stock, analysts at JPMorgan remain bullish on the company moving forward. Analysts mainly pointed to China’s Zero-COVID policy as unsustainable. Each time the country goes into lockdown, the stocks get punished further, which according to JPMorgan is still a short-term overreaction. The firm is cautious ahead of ongoing US rate hikes to battle inflation, but is confident that AliBaba can outperform its current price levels over the long-term.

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