Shares of Ali Baba Group 04.30 NYSE: BABA jumped 9.3% on Monday after China’s e-commerce leader announced a regulatory agreement.
Alibaba was fined $ 2.8 billion as part of an antitrust investigation. The Chinese State Market Regulation Administration (SAMR) has found that it has restricted traders from using competing platforms for no good reason. Regulators have also instructed Alibaba to improve its internal controls to encourage fair competition on its e-commerce sites.
Many investors were relieved that the fine was not higher or the penalty was more severe. The penalty payment is equal to 4% of Alibaba Group’s domestic revenue in 2019. Chinese law allows a maximum penalty of 10% of revenue. In addition, there were no sales requirements or major structural changes in Alibaba’s business.
Wall Street says the fine could allow Alibaba to leave its regulatory problems behind. Several analysts, for their part, posted bullish comments on Alibaba shares.
JPMorgan Analyst Alex Yao, on the one hand, reiterated his rating of the overweight of his shares. He sees Alibaba’s share price rise to $ 320, or approximately 31 percent higher than Monday’s closing price. “The event will serve to close investors’ concerns about Alibaba’s major regulatory risks,” Yao said.
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