The Ant Got Crushed, Buying Opportunity For Alibaba

ALT Perspective profile picture
ALT Perspective


  • Ant Group announced the suspension of its blockbuster IPO in both Shanghai and Hong Kong, resulting in an 8.1 percent plunge on Tuesday.
  • The suspension of the IPO was not due to some shenanigans discovered but the release of draft rules stipulating tightened online microlending standards.
  • The new rules impact the entire industry, not just Ant Group. As an sector leader, Ant has an advantage to emerge from this debacle stronger than peers.
  • Readers familiar with my coverage on Tencent would know it similarly suffered from regulatory tightening but has thrived in spite of the scrutiny.
  • I argue that Alibaba's Tuesday plunge is a buying opportunity.

Alibaba Group (NYSE:BABA) was having a bullish setup ahead of three major catalysts: i) the upcoming IPO of Ant Group which is slated to be the world's largest-ever and with its valuation revised upwards heftily in the prelude to the price-fixing, ii) the largest annual shopping extravaganza with the climax on November 11, iii) the potential earnings beat for its second-quarter fiscal year 2021, aided by the strong Chinese currency.

Is Alibaba's share price uptrend broken?

Alibaba's share price was also on an uptrend as I charted in my previous article titled Alibaba's New Target: $480 By End-2021. The price movements of Alibaba which began in early 2019 are reminiscent of its trading pattern in 2015-2018. I argued that if the share price movement indeed pans out like in the past, Alibaba could reach for greater heights (~$400 in early 2021), suffer some correction, and then shoot for the $480 resistance by the end of next year.Alibaba share price chart (not elliott wave theory but there

Source: ALT Perspective (drawn on

All these loudly flashing buy signals are facing doubtful investors today as Ant Group, the fintech unit of Alibaba, announced the suspension of its blockbuster IPO in both Shanghai and Hong Kong. This resulted in an 8.1 percent plunge as of Tuesday's market close to $285.57, not too far off from the $299.74 price when I drew the above chart last month. Hence, the above setup may still be intact.

ChartData by YCharts

Is the plunge today just "noise" when we look back a month or even a year later? Were the issues leading to the suspension of Ant Group's IPO fundamentally damaging? Let's explore.

The supposed trigger for the authorities' actions

The suspension of Ant Group's IPO was neither due to some shenanigans discovered at the fintech arm itself nor at Alibaba Group as several readers

This article was written by

ALT Perspective profile picture
I am honored to have been categorized as a 5-Star financial expert and ranked among the top 2% of financial bloggers on TipRanks in 2017/18. For a period, I was among the top 3 “Opinion Leaders” for Insider Ownership and Services, as well as top 5 for Long Ideas and Fund Holdings. I am an avid reader of market news and company publications with the aim of improving my investment acumen. I enjoy expressing my findings and opinions through writings. My appreciation and understanding of business strategies improved to a whole new level since completing an MBA (Distinction) from a FT100 MBA school. I have worked in companies with businesses that span multiple industries, according me with the exposure to a myriad of sectors.Check out my Author's Picks and over 190 Editor's Picks, among the highest in Seeking Alpha, if not the most.

Disclosure: I am/we are long BABA, TCEHY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I may initiate a long position in Lufax over the next 72 hours.

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