Top executive detained on corruption charges amid deteriorating market cap concerns.
Patrick Liu Chunning, the VP at Alibaba Group Holdings, and executive director at Alibaba pictures along with the GM of Alibaba Group OSTV segment, has been in the custody of Chinese authorities for corruption charges. The investigation is relate to his time at Tencent Holdings. The news came out amongst Alibaba’s concerns of declining stock prices.
Tencent Holding is the biggest rival in China of Alibaba Group. In the meantime, the corruption related to accusations of taking bribes during Mr. Chunning tenure at Tencent. Before his association with the e-commerce giant company, he was working as a head of Tencent Video. He is currently detained by China’s public Security Bureau, alongwith other former employees of Tencent Holding for similar charges.
Reuters mentioned Tencent’s statement issued regarding the current matter: “An internal investigation brought to light bribery and corruption among some online video employees.” Alibaba also spoke out on the issue via its Weibo account: “We understand that Liu Chunning has been detained by the police due to bribery allegations during his time at Tencent Holdings; we are extremely shocked by the news. We support Tencent’s anti-corruption efforts and believe Tencent was being objective and fair regarding its report to the police.”
Bob Christie, a spokesman of Alibaba, isolated the accusations with Mr. Chunning’s tenure at Tencent Holding and said that the problem was not at all related to the company banner. However, Alibaba is still supporting the executive. The company is all set to provide complete legal support to the executive after the accusations, as reported by Bloomberg.
However the investigation is not related to Alibaba directly, it appears at the time when the e-commerce giant is facing stock price volatility. Hence, the current situation is expected to cause integrity damage on Alibaba banner. The company shares have reached its all time low of $76.21 earlier this week. A huge sell off in stock markets of China dampened shareholders sentiment and affected the stock price of companies listed on United States stock exchanges hitting the bottom. Invests are worried that additional sell offs will result in more losses.
Alibaba stock recovered by more than 1% and reached $79.04 in Thursday trading session. Alibaba’s outstanding share stands at $195.82 billion of market capitalization. However, majority of analysts sustain a positive viewpoint on the stock. Out of fifty two analysts covering Baba stock, 46 gave t a Buy, 4 assigned a Hold, and only 2 suggest a Sell. The twelve month average stock price target stands at $108.09.