The analyst maintained his outperform rating on the stock.
Alibaba’s American depositary receipts traded at $219.32, down 1.18%, in premarket trading Monday. The ADRs dropped 30% from Oct. 27 through Thursday amid the government’s pressure on Alibaba and its payments affiliate Ant Group. Alibaba owns 33% of Ant, the world’s largest financial technology company.
It’s “very hard to predict the outcome” of the investigation, Sebastian wrote in a commentary. It “will not likely result in significant changes to the company’s core business,” he said.
But stronger regulation “may open the door for competitors, including smaller regional players, to gain market share,” Sebastian said. That could put a small dent in Alibaba’s growth, but won’t have a major impact.
KeyBanc Capital Markets said the major downturn in the stock has generated a juicy buying opportunity, according to Bloomberg. KeyBanc has an overweight rating and a $355 price target.
Meanwhile, Alibaba lifted its share buyback facility to $10 billion from $6 billion. The company’s board authorized the purchases through 2022. The program began earlier in the fourth quarter.
Last month, the Shanghai Stock Exchange suspended a $37 billion listing of Ant Group, which would have been the world’s biggest initial public offering.
Regulators said in a statement Sunday they have ordered Ant Group to formulate a rectification plan and implement a timetable for the overhaul of its businesses, including its credit, insurance and wealth management services.