'You're Going To Get Ripped Off': Why These Investors Say You Should Avoid Alibaba Stock

Alibaba Group Holding Ltd BABA shares have sustained a significant rally over the last month, but some see trouble ahead for the Chinese e-commerce giant amid a murky regulatory landscape both overseas and in the U.S.

"The regulatory environment may be cooling in China, although they backtracked or they came out and said the news reports on an Ant IPO were wrong. However, what hasn't cooled is the regulatory environment here," Short Hills Capital's Steve Weiss said Thursday on CNBC's "Fast Money Halftime Report."

What To Know: Ant Group, which is controlled by Alibaba founder Jack Ma, failed to launch on public markets after its planned 2020 IPO was flagged by regulators. 

According to several reports, Chinese regulators began early stage talks about a new attempt to list on the public markets, which sparked confidence that China's regulatory crackdown could be easing, but investor hopes were squashed when Ant Group said it has no such plans. 

"Under the guidance of regulators, we are focused on steadily moving forward with our rectification work and do not have any plan to initiate an IPO," a spokesperson for the company reportedly told CNBC.

Why It Matters: The news sent Alibaba shares tumbling, and although it looks like it could be a good time to jump on the momentum train, Weiss cautioned investors.

He told CNBC that SEC chair Gary Gensler is attempting to make significant changes to protect retail investors. 

Related Link: SEC Chair Gensler Proposes 'Open And Transparent Auctions' As Alternative To Controversial Payment For Order Flow

"You can't protect investors unless you require these Chinese companies to go through the same rigorous disclosure that U.S. companies do and other foreign companies do. So right now it still looks like they are going to be delisted. You're going to get ripped off," Weiss warned. 

Following Weiss' comments, Ritholtz Wealth Management's Josh Brown chimed in and agreed with him.  

"There's enough risk in regular stocks, like why do you need more risk? It's not like historically these things have outperformed, they've underperformed so more risk, less potential reward," Brown said.

BABA Price Action: Alibaba has a 52-week high of $230.89 and a 52-week low of $73.28.

The stock was down 7.64% at $110.47 Thursday afternoon, according to data from Benzinga Pro.

Photo: courtesy of Alibaba.