There were those who believed that e-commerce mainstay and Chinese stock Alibaba (NYSE:BABA) was a little too far in the pocket of the Chinese Communist Party. But as it turns out, the side that believed this might have been more right than some expected. Alibaba revealed just how much of its operations are owned by the Chinese government, and it’s actually quite a bit. Investors, meanwhile, didn’t care much either way, sending shares up fractionally in Monday morning’s trading.
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The Securities and Exchange Commission (SEC) in the United States started up queries into Alibaba’s operations to see how much of Alibaba was, in fact, state-owned. Alibaba revealed quite a bit of state ownership, with more than 12 of its business units having either direct or indirect Chinese government ownership involved.
More specifically, six of Alibaba’s direct sales businesses have direct government ownership, while another five have state-owned enterprise ownership below 10%. Furthermore, the government has less than a 30% stake in the 12th unit.
“We’re Back!”
The news comes at a time when Alibaba’s fortunes weren’t exactly looking great to begin with. A rising tide of internal changes, scrapped plans, and an increasingly troubled Chinese consumer weren’t doing anything helpful for Alibaba for some time. Rising competition isn’t helping matters either, but reports suggest that a new management team at Alibaba is offering a new lease on life for the company. But with consumer confidence in China hovering somewhere around “devastated,” as described by one portfolio manager, it remains to be seen if anyone will care if Alibaba is “back” or not.
Is Alibaba a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on 15 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 13.71% loss in its share price over the past year, the average BABA price target of $101.49 per share implies 33.14% upside potential.
