China Seeking to Reduce Empire of Alibaba's Jack Ma

Chinese officials and government advisers are seeking to pare down Jack Ma's tech and financial empire, a media report says.
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Alibaba’s  (BABA) - Get Report founder, Jack Ma, is in more hot water with China’s government, a media report says.

Chinese officials want to reduce his technology and financial empire, including Ant Group, a financial payment/technology concern, which is 33% owned by Internet giant Alibaba, knowledgeable Chinese officials and government advisers told The Wall Street Journal. 

They said the government may grab ownership of a bigger part of his businesses.

After Ma made comments critical of China’s regime last month, the government scuttled Ant’s IPO. 

Then Chinese regulators began investigating Alibaba for anticompetitive practices. And the central bank told Ant to narrow its focus to just its payment business.

Alibaba shares recently traded at $236.03, up 6.2%. They've gained just 11% year to date, thanks to the government’s pressure on Ma.

Baird analyst Colin Sebastian cut his price target on Alibaba to $285 from $325, affirming his outperform rating, amid the government probe. It’s “very hard to predict the outcome” of the investigation, Sebastian wrote in a commentary.

The crackdown on Alibaba and Ant should help the U.S. technology sector, says analyst Daniel Ives at Wedbush. “The Ant Financial IPO delay and further regulatory crackdown is a major black eye for the Chinese tech sector,” he said.

The “dynamics will yet again bode well for U.S. tech stocks as the favorable backdrop creates a nirvana set-up for FAANG and the overall U.S. tech sector into 2021,” Ives said. FAANG is the group of major tech companies including Facebook  (FB) - Get Report, Amazon  (AMZN) - Get Report, Apple  (AAPL) - Get Report, Netflix  (NFLX) - Get Report and Google/Alphabet  (GOOGL) - Get Report.