Alibaba Hit With Record $2.8 Billion Fine | BABA Stock Impact. China Fines Alibaba $2.8 Billion in Landmark Antitrust Case. The penalty is the biggest move to date in China’s campaign to tighten supervision of Alibaba and Jack Ma. The fine was imposed due to Alibaba allegedly abusing its dominant position over rivals and merchants on its e-commerce platforms, a record penalty in the country that comes amid a wave of scrutiny on the business empire of company founder Jack Ma.
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Oh, my goodness, we have some incredible news coming out from china of all places. It seems that the chinese government just announced a 2.8 billion dollar fine and a three-year probation against alibaba. Now that shouldn't come as a huge shock to you, because if you remember which you should back in december, we first heard about an investigation against alibaba for allegedly violating various chinese antitrust rules. Now i was as shocked as you to find out that china has anti-trust rules, but it's a whole different matter now check this out jack ma.
Although a lot of people still think that he's heavily involved with this company he's actually not he's been away for a long time for a couple years, he's not even involved in the day-to-day management of the company. However, this company is really identifiable with his name and himself so when he came out and basically criticized the chinese government for over regulating the industry immediately after we heard about the investigation, the chinese government pretty much decided to be the scorpion in this following story. If you remember that's kind of the story that i always tell the frog and the scorpion right, so the scorpion comes up to the frog and says: hey. Take me to the other side of the river.
I can't swim and the frog says hell: no, i'm not about to take you. You're gon na bite me we're. Both gon na die no way jose and essentially then the scorpion basically says a logical thing. He says why would i bite you if i bite you we're both gon na drown and die, doesn't make any sense so reluctantly the frog agrees and as they're swimming through the current all of a sudden, the frog feels a sting and he realizes he just got Bitten by the scorpion - and he looks at the scorpion says why the hell did you just bite me now we're both gon na die.
What did you do, and the scorpion looks at him says, couldn't help myself and the thing about the chinese government that makes them the scorpion in the story is quite simple. The chinese government is essentially more scared of losing control than actually losing the war against the us and the entire western world. Of course, they want to win, but much more than that they're much more scared of losing control. When somebody gets too big, when somebody allows themselves to speak freely, that is much more scarier to the chinese government than losing the economical battle.
Quite simple, so in this case they just couldn't help themselves. However, let's put things in proportion. I know that 2.8 billion sounds like a lot of money and, of course it's unpleasant, but you got to understand who you're dealing here with right: 2.8 billion for alibaba is a parking ticket. It's a spitting ticket.
It's a slap on the wrist. It's nothing! Let me explain why alibaba generated almost 100 billion dollars of revenues last year now they generate 25 billion dollars of net operating profit. So this whole thing is probably around 10 of the net operating profit. It's about point 17 of the entire assets and plus they're sitting on the pile of cash from what i'm looking here right now, they're sitting on 50 billion dollars worth of cash. So this is really nothing, it's not a huge deal, but will it negatively affect alibaba beyond just the cash amount which is not significant? Yes, let me explain why. The thing you need to understand here is that this thing is only the beginning. This is just the announcement that the battle is starting now. Alibaba will definitely have to face with a lot of consequences, which we still haven't heard about.
Of course, the ant ipo is not going to go through they're, probably going to restructure the whole thing, basically carving out alibaba and and pretty much restructuring it. So it doesn't get too big because they can't handle that. Of course, that's going to hurt alibaba, and the thing you have to remember here, is that anti-trust authorities, even in china, actually have a lot of impact after the fact. Imagine that this thing just came out what happens next well now, alibaba is in the doghouse for the next three years, at least for the duration of the operation.
Now, in those three years, their competitors have so much leverage they're pretty much holding them by the nuts. Every time alibaba does something that the competitors don't like they just skittle down to the entertaining offices in shanghai or whatever it is and basically say, hey alibaba is not playing fair. Alibaba is not going to compete as hard. The competitors know that they can go crazy, plus there's going to be structural and actual operational guidelines to prevent alibaba from doing these practices today, essentially, opening up things for more competition.
So beyond the fine which i don't think is significant, the actual structural stuff, basically carving out ant, which i think will happen and essentially hindering the competitive nature of alibaba and letting the competitors breathe, actually gets the chinese what they want, which is more control and nobody Who's bigger than the government, however, for alibaba, it's not such good news, and it's partially one of the reasons i don't like to invest in chinese companies and a lot of you may say well tom, every time, there's a scandal that has anything to do with alibaba, Which happens quite often, the share price goes to 220 and then it bounces back up and it might. And if i was a swing trader i might care, but as a long-term value investor, i'm not interested in putting my money where the political environment is so volatile and unforgiving. I'm not gon na do it. You can do whatever you want, because this is just my opinion might be.
Inaccurate might be wrong, might be the ramblings of a madman. Who knows you got ta? Do your own research find out for yourself, allegedly blah blah mother effing blah before we sign out a huge shout out to our patreons and channel members? We just completed a 30 upside for fortinet. If you remember in february, i came out and said: hey fortinet is gon na do 30 and will go to 195 and now 60 days later. The share price is at 197. Now it means that the share price went over my target price by two dollars and, as you know, my methodology is that every time my target price gets hit, i reevaluate whether i want to raise the target price or liquidate my holdings and in the case of Fortinet, i am liquidating all my holdings, i'm getting out, i'm selling everything at 197 and i'm out of fortnite. I wanted to share this with you, so you know that i'm being completely transparent, i'm out of fortnite at this price, i'm out, i'm gon na take 30 profits, sayonara now, as always a huge thanks to the channel members and the patrons for making this happen. Congratulations if you invested in fortnite, we have a lot more interesting stuff going on on patreon, go check it out. It's five bucks per month and you'll be supporting the channel.
Thank you. So much we'll see you in the next video.
I guess the fine impacted the stock by driving up the price by 20 points today. 😂😂😂😂😂😂
Seems capitalism is alive and well in China and not all companies are controlled by the Government. As Marx said, the major enemies of capitalism are monopolies. Now they have some of the same problems we have.
This video is already out of date +8% today, already past the anti-monopoly uncertainty ahaha
You don’t know what are you talking about. Do you know how many billions our tech companies like google Facebook amazon and others pay a year for antitrust violations? This is just how things work
chinese gov dont care abt their corps, they will at some point always cash in, take all from the owners,,in this case, Ma…could end up having some accident down the road…cant trust the chinese
100% spot on! It is only a matter of time before the CCP try to "nationalize" assets like Ali Baba under the guise of anti-trust or some other manufactured excuse. It is really shocking to me that there was not more selling based on what happened with ANT. China is a massive shell game. They lie at every level. They cheat. They copy. They invent nothing of their own. They only clone. They now have a puppet as POTUS so the deception continues.
Why the clickbait title and hyped shock faces on your recent videos? I like your no bs substantive presentations. Clickbait titles and shocked looks unnecessary. Keep it real.
When becoming a basic level patreons do they still get these buy and sell alerts a few days or a week before going public on YouTube… only a year in as far as investing goes… still needing guidance but don’t have a lot to play with so can’t become a vip level patreon
Thanks in advance for your response
Very true and I agree.
But one point to note: CCIC, a china state owned investment firm put a target price for alibaba at 320. Just recently. I can't see why they would want to do that
If you like this guy and many others and don't want to support with 💰, give great content with a minimum of a LIKE 👍. Thx for the great analysis!
Let's all keep investing in this country 😎 DONKEY! Lots of oppurtnities in America and Europe
I did a job for someone who knows Jack Ma. Supposedly, Jack Ma spoke out against the CCP, took all of his money and assets, and left him with $10 million. The CCP is awful.
No, he's not going to prison. Yes, Alibaba should have been fined a long time ago. This is nothing about "speaking freely." Alibaba has attracted a lot of resentment in China because of their unstoppable insatiable greed. So many companies in China will literally forbid you from ever selling/using products to/from their rival companies. So don't act as if this is just about "control." The evidence is ample. Alibaba would have been fined in EU and US a long time ago.
I belive that governments should bend down to corporations, such as in America, where corporations can control democracy through lobbying. The fact that China corporations has to follow the will of the government is travesty, and is anti-capitalism and anti-democracy. Since i was born in this world, the best government always has lobbying, governments that bends down to corporations as well as democracy. China has none of this
China is threat to all World.
China claimed that there is no damage due to COVID this claim itself proves that China was well prepared & aware about the VIRUS experiments before creating & spreading of Virus WORLWIDE. China is the responsible for the kill ings of millions due to this CHINES VIRUS😠😠
First of all, a friend, Rick Tadder, is THE original Alibaba! He should have put a patent on this. As far as this Alibaba? Caveat Emptor! Sounds…crooked, just like ShitCoin!
Dude, You just described the Libtards in charge of the House of Congress and White House in the United States!
Thank you for sharing with the little guy! I feel like I have a fighting chance against the big institutions. I don't think you promote the amount of value you bring to your Patreon supporters enough. I bought FTNT at $156, I'll liquidate my holdings as well, but what a trade. Solid research and sound recommendations at the cost of $5. I think you just paid for my VIP upgrade, lets go!
These fines are great news. Now the company can write this off and move on. Uncertainty gone. What do you think Tom?
I’m so glad that I recently found your channel. American news media has been avoiding many of the fraud stories that you cover on this channel. Thank you for all the effort you put into your research.
Clever that you don’t invest in any China companies. Also, there are still China political risks for those foreign companies involving in China market like Nike Apple Tsla.
Warren Buffet bought BYD, Chinese EV manufacturer, Charlie munger bought alibaba, May funds managers bought Ali baba.
It is not even financial risks for me … I do NOT invest in any China Chinese company plainly based on principle … my personal principle for NOT SUPPORTING ANY COUNTRY or REGIME that is such horrific HUMAN RIGHTS VIOLATORS throughout the decades!!!
… Nor any non-Chinese companies that get into bed with them (hence, I don't invest in Apple despite it being "so valuable"!)
… the real punchline of that story… Frog: "why'd you bite me? You said you wouldn't…" Scorpion: "that's my nature…"
… and yes, that's China's nature as well, I believe.