Alibaba Has Worst Day In A Year On SEC Accounting Probe
Alibaba ( BABA ) disclosed Wednesday that the Securities and Exchange Commission has been probing whether its accounting into its Singles Day e-commerce event and various consolidation practices violate U.S. securities laws. Shares of the e-commerce giant fell 8.1% to 74.55 in late afternoon trading on the stock market today , diving below the 50-day moving average where Alibaba had found support in recent days. Alibaba, which hasn’t closed below the 50-day line since March 1, is now threatening to undercut its 200-day line. Alibaba is on track to have its worst one-day percentage loss since Jan. 29, 2015, when shares tumbled 8.8%. IBD’s Take: How healthy is Alibaba’s stock, and how does it compare vs. key rivals such as Amazon? Find out at IBD Stock Checkup Alibaba reported the SEC probe in an SEC filing. Here is the key passage. “Earlier this year, the U.S. Securities and Exchange Commission, or SEC, informed us that it was initiating an investigation into whether there have been any violations of the federal securities laws. The SEC has requested that we voluntarily provide it with documents and information relating to, among other things: our consolidation policies and practices (including our accounting for Cainiao Network as an equity method investee), our policies and practices applicable to related party transactions in general, and our reporting of operating data from Singles Day. We are voluntarily disclosing this SEC request for information and cooperating with the SEC and, through our legal counsel, have been providing the SEC with requested documents and information. The SEC advised us that the initiation of a request for information should not be construed as an indication by the SEC or its staff that any violation of the federal securities laws has occurred. This matter is ongoing, and, as with any regulatory proceeding, we cannot predict when it will be concluded.” Singles Day — Nov. 11 — has become the world’s largest e-commerce event, far above Cyber Monday or the new Amazon ( AMZN ) Prime Day last year. Alibaba had $13.7 billion in sales in last year’s event, with JD.com ( JD ) and other Chinese retailers also taking part. JD stock fell 3.8% intraday, perhaps in sympathy with Alibaba. 020 Fuels China Internets Separately, Alibaba, Baidu ( BIDU ), Tencent ( TCEHY ) and other Chinese Internet companies should should see continued strong growth in online-to-offline spending, Moody’s says. Moody’s sees Baidu, Alibaba and Tencent, sometimes referred to as “BAT,” should deliver 15%-30% revenue growth over the next 12-18 months, partly due to O2O efforts that have increased customer engagement and monetization. Alibaba, Baidu and Tencent have spent billions of dollars on O2O-related initiatives in recent years. “For all three companies, we expect that their investments will remain high, as they establish or acquire end-to-end logistics capabilities,” Moody’s said.