Alibaba (NYSE:BABA), the Chinese e-commerce giant, saw a surge in its stock prices as it successfully concluded a three-year regulatory investigation. This marked the end of a tumultuous period for the company following an antitrust fine imposed in 2021 for monopolistic behaviors.
In an official statement, the Chinese regulatory body, the State Administration for Market Regulation (SAMR), confirmed that it closely monitored Alibaba to ensure compliance with antitrust laws over the past few years. The regulator stated that the rectification process had yielded positive outcomes.
Opinionated Market Policies Benefit Alibaba’s Dominance
SAMR imposed a hefty fine of RMB18.23 billion ($2.6 billion) in 2021 after discovering that Alibaba engaged in anti-competitive practices. Notably, the company forced merchants to select between two e-commerce platforms, essentially prohibiting collaboration with both. The regulator highlighted that the “choose one” strategy unfairly augmented Alibaba’s dominance in the market.
Following the fine, SAMR closely monitored Alibaba’s adherence to the mandated regulations. Recently, SAMR declared that Alibaba had completely adhered to these guidelines, discontinuing the “choose one of two” policy. Additionally, the regulator plans to assist Alibaba in enhancing its compliance, efficiency, and innovation.
Regulatory Revamp Signals Positive Prospects for BABA
The conclusion of the regulatory scrutiny marks a positive turn for Alibaba, signifying the end of a significant conflict with Beijing that had adversely impacted the company’s stocks. BABA shares had plummeted by over 70% from its pinnacle in 2020. Despite this surge, Alibaba still encounters challenges, including subdued growth amidst fierce competition in China’s e-commerce industry and cautious consumer expenditure.
Is Now the Right Time to Invest in BABA?
Analysts maintain an optimistic outlook on BABA stock, with a Strong Buy consensus based on 13 Buy ratings and three Holds. Over the past year, BABA has witnessed a decline of over 10%, while the average price target stands at $109.53, projecting a potential upside of 35.2% from current levels.
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