Why Alibaba Shares Are Rebounding From Wednesday's Losses

Alibaba Group Holding Limited BABA shares are reversing course after Wednesday's steep declines.

What Happened: Alibaba started the week on a strong note by advancing Monday and Tuesday before pulling back on Wednesday.
The stock is seen fighting back Thursday amid across-the-board strength in tech stocks. The Nasdaq Composite Index is rebounding from three straight sessions of declines and is seen up about 0.77%.

The recent weakness in the tech space stemmed from rising bond yields that rendered investment in big tech stock unattractive.

That the gains in Alibaba have come despite a negative lead from Hong Kong is commendable. Alibaba's Hong Kong-listed shares shed about 4% at close amid fears over the power crunch in China hurting growth and the broader negative sentiment toward tech conglomerates due to the country's regulatory clampdown.

In another negative catalyst, Citigroup analyst Alicia Yap reduced the price target for Alibaba shares from $300 to $240, citing the possibility of a guidance cut by the company for fiscal year 2022.

Related Link: 3 Alibaba Analysts Say Valuation Is Attractive Despite Q1 Disappointment

Why It's Important: Alibaba become the subject of increasing regulatory scrutiny well ahead of its tech peers. The company was slapped with a $2.8-billion antitrust fine late last year and forced to shelve plans for Anti Financial IPO.

In February this year, the attention of China's regulators widened to include other big internet and tech companies as well as for-profit education companies. Most companies have shed about half their market capitalizations since the crackdown began early this year.

From a high of $319.32 in late October, Alibaba's shares have fallen over 50%.

BABA Price Action: At last check, Alibaba shares were trading at $147.70. 

Alibaba co-founder Jack Ma. Benzinga file photo by Dustin Blitchok.