Alibaba Still Feels the Impact of Its 29% Drop During the Ant IPO Scandal and Crackdown

Court: S.D. New York

Case: 1:20-cv-09568

Alibaba BABA is still navigating the long shadow cast by the collapse of Ant Group’s highly anticipated IPO. In 2020, the company stood to gain significantly from the launch of its fintech affiliate, with the $35B listing expected to set records and drive a major revaluation of Alibaba’s broader business.

That momentum came to a halt just days before the IPO, when Chinese regulators abruptly intervened. Authorities accused Ant of skirting key banking regulations to expand its consumer lending operations. The IPO was immediately suspended, wiping 13% off Alibaba’s share price in a single day. But the damage didn’t stop there.

The suspension opened the floodgates to broader regulatory scrutiny. A formal antitrust investigation into Alibaba’s market practices soon followed, alongside growing concerns over Ant’s high-risk lending model and the political sensitivity of its investor base. By the end of December 2020, Alibaba’s stock had fallen 29% from its November peak.

Soon, shareholders filed a class action lawsuit alleging the company misled the market by failing to disclose mounting regulatory risks. That legal battle has now reached a resolution: Alibaba has agreed to a $433.5M settlement. Investors who held shares during the affected period can still verify their eligibility and file for compensation.

In the aftermath, Alibaba has spent the last three years working through a sweeping regulatory overhaul. That process included a record-setting $2.8B antitrust fine, tighter oversight, and restructured operations aimed at satisfying Beijing’s compliance demands. Yet despite these efforts, the stock remains under pressure, now trading near $120—still far below its 2020 highs.

Whether this settlement represents closure or simply another step in Alibaba’s long recovery remains an open question. But for now, the regulatory scars of 2020 continue to define the company’s valuation story.