1704273528 Why Alibaba Stock Slipped at the Start of the New

Why Alibaba Stock Slipped at the Start of the New Year

Alibaba (NYSE: BABA) Investors have had to endure a lot in recent years. After founder Jack Ma made offensive comments about Chinese finance ministers, the tech giant bore the brunt of Beijing's crackdown on the tech sector, resulting in a multibillion-dollar fine for Alibaba and a series of divestments to address Beijing's fears of a power grab Dispel technology monopolies.

Looking ahead to 2024, some investors had been hopeful that there could be a turnaround, but Alibaba shares moved in the opposite direction today after weak Chinese economic data and President Xi Jinping, in a rare moment, acknowledging the headwinds, that the company faced.

As a result, Chinese stocks fell across the board today, with Alibaba closing down 3.5%, matching its stock market price decline Nasdaq Golden Dragon IndexThis shows that Alibaba's competitors declined by a similar percentage.

The Alibaba logo in a green area with grass and trees.The Alibaba logo in a green area with grass and trees.

Image source: Alibaba.

China's economy is cooling down

China's Purchasing Managers' Index (PMI) showed factory activity fell slightly from November to December, falling to 49, its lowest level in six months. The report dampened optimism that China's huge manufacturing sector would begin to recover in 2024.

Elsewhere, Xi Jinping commented on 2023 in a televised address: “Some companies have had a hard time. Some people have had difficulty finding work and meeting their basic needs.” The comments appeared to underscore China's difficulties recovering from the pandemic.

As one of China's largest and best-known companies, Alibaba has not been able to escape the malaise of the Chinese economy.

Can Alibaba get back on its feet?

Alibaba's recent results show some signs of improvement. Revenue rose 9% to $30.8 billion in the September quarter and operating income rose 34% to $4.6 billion as its earlier restructuring plan appears to be paying off.

Still, the company disappointed investors in November when it announced it would no longer spin off its cloud unit due to the impact of U.S. chip export regulations.

The story goes on

With investors still focused on the restructuring plan, Alibaba may be less affected by China's weak economy than other Chinese stocks, but a rebound in the economy would still clearly benefit Alibaba, as the stock has not yet returned to its pre-pandemic growth rate is.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Why Alibaba shares slipped at the start of the new year was originally published by The Motley Fool