Will Alibaba Stock Be Delisted?

Luckin Coffee Inc. (LK) shares sank 94% after the company received a delisting notice from the NASDAQ. Now, several other Chinese companies could be delisted as well. Alibaba Group Holding Ltd. (BABA) is among them.

Will Alibaba be delisted? Here's what we know:

Luckin was China's answer to Starbucks Corp. (SBUX). The stock soared 177% on hype from November to January, less than a year after IPO. But, the company fraudulently reported $130 million in sales on a recent quarterly report. That led to a delisting from the NASDAQ and the plummeting of the stock.

U.S. executive and legislative branches have been railing against shoddy financial practices by China through the last year's trade war. A combination of the coronavirus pandemic and China's Hong Kong policy have added fuel to the fire in the last couple of weeks.

The U.S. Senate passed a bill that would delist companies unable to verify that they are not under the control of a foreign government. This has prompted many investors to think about what would happen if other Chinese stocks were delisted. We'll get into how you can respond in just a minute. First, here's how an Alibaba delisting could affect you.

Alibaba Delisting: How It Affects Investors

A giant sell-off is very likely in each case, whether it's Alibaba, Baidu Inc. (BIDU), or another Chinese stock. And the effects of that could be devastating to Alibaba investors who bought into the e-commerce giant's success.

The company connects manufacturers and sellers worldwide. And, it's been growing its revenue significantly every year. This year, it reported $509 billion in annual revenue, up 35% from $376 billion last year. In 2021, the company expects revenue of $650 billion, another 27%.

The growth prospects for Alibaba are so great that CFO Maggie Wu called it a "challenging quarter" when the company's revenue rose 22% year over year for the January-March quarter. Wu assured investors that the company's accounting practices were solid, "in accordance with U.S. GAAP."

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