Alibaba has recorded the highest brand value loss in Q1 2022. The brand value of the online trading platform has plummeted by 42%, according to data presented by tradingplatform.com.
Edith from tradingplatform.com attributes the drop to a return of normalcy following the Covid-19 pandemic. She said, “As coronavirus was taking over the globe, many people turned to online shopping. It was the safest way to get their products as physical contact was restricted. Investors couldn’t fly across the continents to make purchases, and trading platforms were making huge profits. However, that is not the case since 2022 began. There is a return to normalcy, and international flights have resumed. Most clients are opting for physical shopping, which explains the huge loss Alibaba is recording.”
Strict lockdowns in China
Alibaba Group Holding has been down for days on worries that the country’s stringent lockdowns will harm its economic growth. The Chinese government has adopted a stringent zero-COVID policy across the country following a new wave of infections.
The IT stock has dropped, and there is no indication that this trend will reverse. This is making investors more negative about Chinese equities. Retail sales and industrial production have already slowed due to the lockdowns.
According to The Wall Street Journal, retail sales fell 3.5 percent year over year in March, while industrial production increased only 5%, compared to the projected 7.5 percent. With no end in sight to the zero-COVID policy, Alibaba investors and Chinese stock investors, in general, could expect additional brand value loss.
Chinese officials penalized Alibaba after an anti-monopoly investigation by imposing a $2.8 billion fine. The fine left a significant dent in the online trading platform. It also came when Alibaba was rallying to break out of the downtrend.
Moreover, authorities halted the $34.5 billion Ant Group IPO. Alibaba’s fintech unit was planning to list in Shanghai and Hong Kong. The Shanghai exchange suspended the IPO listing due to the company’s failure to meet its regulatory standards.
