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On Friday, Eastern Time, Alibaba was included in the “pre-delisting” list by the U.S. Securities and Exchange Commission (SEC) and faces the risk of delisting. Alibaba shares fell 11% to $89.37 as of the close, down 21.4% for the month.
According to the Foreign Company Accountability Act (HFCAA) passed by the United States in 2020, foreign companies listed in the United States may be forced to delist if they fail to have U.S. regulators check audit papers for three consecutive years. A few days ago, Ali released its 2022 fiscal year annual report, when the outside world expected that the company was likely to be included in the “pre-delisting” list by the SEC.
In 2014, Alibaba’s IPO in the United States was the largest IPO in history at the time. As of Friday’s close, Alibaba’s market value was US$236.664 billion (about 1.59 trillion yuan), which has shrunk by more than 70% from its market value high at the end of 2020.
Recently, Alibaba has announced an application to change its listing status from a secondary listing to a primary listing in Hong Kong, which is expected to take effect before the end of 2022.
After the completion of the relevant main listing process, Alibaba will achieve dual main listings on the New York Stock Exchange and the Hong Kong Stock Exchange. Brokerage analysts believe that dual-listed companies in Hong Kong have the opportunity to be included in the Southbound Stock Connect, which is expected to obtain higher liquidity and improve the company’s financing capabilities.
“Applying for primary listing status in Hong Kong doesn’t necessarily mean they think they will be delisted in the U.S. … it’s just to reduce potential risk,” said Tiger Brokers analyst Bo Pei.
Besides Ali, other companies listed on Friday include Mogujie, Boqi Pet, Cheetah Mobile and others.
Source: Financial Associated Press
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