- NYSE:BABA fell by 2.54% on Wednesday as Chinese ADR stocks tumbled during the session.
- The Chinese government targets the gaming industry and its influence over Chinese youth.
- The fallout from the dropped charges in the recent scandal is only beginning.
NYSE:BABA continued its wild ride for shareholders on Wednesday as the stock erased all of the gains made during Tuesday’s rally. Shares of AliBaba dropped by 2.54% and closed the trading session at $170.71. The decline came as all three indices closed lower with the blue-chip Dow Jones sinking for the third straight session. Markets have had a tentative start to the week following the Labor Day Weekend, as rising cases of the COVID-19 delta variant has raised concerns about economic recovery. The session also saw numerous Chinese ADRs fall including Baidu (NASDAQ:BIDU), Didi (NYSE:DIDI), JD.com (NASDAQ:JD), and PinDuoDuo (NASDAQ:PDD).
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The reason why Chinese stocks were falling on Wednesday was another round of regulations from the Chinese government. This time, the target was the gaming industry and companies like Tencent (TCEHY) were feeling the heat. The new crackdown is meant to improve the mental and physical health of Chinese youth by limiting the amount of time that they can play online games. The move comes as Tencent had already installed a limit as to how often children can play every week. It also comes on the heels of the company announcing it will release League of Legends Mobile on September 15. Shares of Tencent were down 2.95% on Wednesday.
BABA stock price target
The fallout from the Chinese prosecution dropping the charges against a former AliBaba manager for forcible indecency, is just about to begin. The results underscore the problems that female employees have in the country, particularly surrounding work-related events and client meals. Since the charges have now been dropped, we can reasonably expect more outrage from the #MeToo movement in China, which could mean the scandal stays in the headlines for the foreseeable future.
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