BABA: Stock Underperforms on EPS Downgrade — But $433.5M Ant IPO Fallout Still Lingers

Court: S.D. New York

Case: 1:20-cv-09568

Alibaba (BABA) closed down 2.28% to $119.36, underperforming broader indices and continuing a volatile month for the Chinese tech giant. While the company has posted a 7.71% gain over the past 30 days, recent earnings estimate revisions have dampened sentiment. Zacks now ranks BABA a “Strong Sell” as EPS estimates drop by over 19% in the past month. Behind the short-term volatility, however, Alibaba is still contending with long-term legal overhang from its $433.5 million investor settlement tied to Ant Group’s failed IPO and ensuing regulatory fallout.

Earnings Pressure Builds: What to Know

• Stock Movement: Down 2.28% in latest session, underperforming the S&P 500 and sector peers
• Zacks Rank Cut: Downgraded to #5 (Strong Sell) amid a 19.39% cut to EPS estimates
• Upcoming Results: Q2 earnings expected at $2.13 per share, down 5.75% YoY
• Revenue Forecast: Projected at $34.26B, a 2.37% increase YoY
• Valuation Snapshot: Forward P/E at 14.24; PEG at 1.64, both below sector averages
• Sector Positioning: Internet – Commerce segment ranked in top 37% of all industries by Zacks

Timeline Overview

• November 5, 2019: Chinese regulators warned Alibaba over antitrust and financial compliance
• November 2, 2020: Ant Group executives summoned by central bank and regulators
• November 3, 2020: Ant’s IPO abruptly suspended; BABA shares dropped 8%
• December 23, 2020: Antitrust probe into Alibaba launched
• December 24, 2020: BABA fell 13% in one of its steepest single-day drops
• April 22, 2022: Investors filed lawsuit alleging misleading conduct

Allegations Include

• Failing to disclose escalating regulatory scrutiny of Ant Group
• Misrepresenting readiness of Ant’s IPO and financial compliance status
• Withholding material risks tied to lending practices and market dominance claims

Investor Update

Alibaba agreed to pay $433.5 million to settle investor allegations related to the abrupt halt of Ant Group’s IPO and subsequent regulatory actions. The settlement closes a multiyear legal dispute but leaves lasting reputational questions. As BABA navigates declining earnings forecasts and increased valuation pressure, its ability to stabilize post-settlement remains a key concern for investors.

You can check more information about it and file for a payout HERE.