Alibaba US price target cut to US$285, sell-off hits large Chinese tech stocks

Alibaba Group Holding led a second day of frenetic selling among China’s largest tech companies on Wall Street on Monday.

Alibaba and its three largest rivals – Tencent Holdings, food delivery giant Meituan and JD.com Inc. – have shed nearly US$200 billion in Hong Kong over the two sessions since Thursday when regulators revealed an investigation into alleged monopolistic practices at Ma’s signature company, Bloomberg reports.

That marked the formal start of the Communist Party’s crackdown on not just Alibaba but also, potentially, the wider and increasingly influential tech sphere.

“It is very hard to predict the outcome of the Chinese government’s ongoing investigation into Alibaba and other large consumer internet platforms,” Baird analyst Colin Sebastian wrote in a note. He cut his price target on Alibaba’s U.S.-listed shares to US$285 from US$325, citing “uncertainty around government oversight and potential for direct regulatory action in the coming year.”

The company’s American depositary receipts fluctuated before closing Monday largely unchanged, after a historic 13 percent slide the previous session.

Volume surged to several times the 12-month daily average, reflecting doubt over what’s going to happen next.

JD.com fell 3.4 percent and Tencent declined by 3.5 percent.

The day’s Hong Kong trading was also fierce: Alibaba fell by 8 percent Monday, shedding US$270 billion of value since its October peak, while Tencent and Meituan both tumbled more than 6 percent.

KeyBanc Capital Markets wrote that this “significant” pullback had created an attractive buying opportunity, adding that it doesn’t anticipate a meaningfully different competitive landscape for the company.