Chinese authorities on Friday ended a yearslong investigation of financial-technology company Ant Group, an affiliate of e-commerce leader Alibaba. The news sent BABA stock surging.
The government fined Ant the equivalent of $982 million for violating laws concerning consumer protection and corporate governance, the Wall Street Journal reported. Meanwhile, the People's Bank of China announced the penalty in a statement published on its website. The bank has been behind a revamp of Ant since scuttling the company's $34 billion initial public offering in October 2020.
The penalty concludes the regulatory overhaul of Ant, which runs the popular digital payment platform Alipay, Reuters said. In addition to Alipay, Ant's businesses include payment processing, consumer lending and insurance products.
Ant said it has made changes to its operations and governance as a result of the regulatory investigation. The fintech company soon hopes to revive its plans for a stock market debut. Alibaba owns a third of Ant, the Journal said.
BABA Stock Rises On News
On the stock market today, BABA stock jumped 8% to close at 90.55. The government investigation of Ant had been an overhang on Alibaba stock.
BABA stock peaked at 319.32 in October 2020 when Chinese regulators halted Ant's IPO and began a broader crackdown on the country's internet sector.
Alibaba ranks No. 14 out of 59 stocks in IBD's Retail-Internet industry group, according to IBD Stock Checkup. But BABA stock has a mediocre IBD Composite Rating of 53 out of 99.
The e-commerce firm has been struggling with declining sales lately. Its revenue has fallen on a year-over-year basis for the last four quarters.
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