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Alibaba investors losing confidence as company's shares go below debut price

September 17
9:47 PM 2015

Alibaba is in big trouble as Investors lose confidence over the continuing decline of shares caused by the slow consumer spending brought by the Chinese economic meltdown. 

Chinese tech giant Alibaba shares recently dropped to levels below  its debut price, making its investors sceptical.  

Just last year, Alibaba Group Holding Ltd went public in the biggest stock listing ever. So far, it has spent more than $6 billion on various products from eStores to robots. This scattered investment strategy makes investors wonder when the company's share will bounce back.

Alibaba is in trouble with the slow down of the Chinese economy, which makes buyers limit their expenditures. Meanwhile its smaller rival JD.com, which is backed by nemesis Tencent Holdings Ltd, is experiencing a growth in market share. 

In the first two months following its initial public offering of stock last year, Alibaba's shares skyrocketed to 75%. Alibaba's shares have been in a steady downward curve after that surge last year. Shares went down to its initial price of $68. Recently, it went lower to $64. According to Barrons, it could continue to fall as the Chinese economy is in a meltdown. Besides the economy, other problems Alibaba is facing includes competition with other eCommerce, the company's culture, and the way it is managed. Last week, Alibaba reported that its volume for this quarter will be lower than what was initially expected. Growth in volume already dropped to 34% in the last quarter, which ended in June. This is lower than the 50% plus in the past few years.

Alibaba Vice Chairman Joe Tsai said hey are not happy with the share price going bellow its listing level last year but is still confident that they are in better shape than before. He recommended that investors should look at their stocks in a long-term view.

"Are we thrilled that the stock is below IPO (initial public offering) price? No, absolutely not," Tsai said, but "on all the metrics we're doing very well".

Slower consumer spending caused by the Chinese economic meltdown is one of the major culprits for the decline in shares.

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