After Alibaba (BABA) founder Jack Ma shared his true thoughts about the Chinese government, he went under the radar for months, with many assuming he was missing at the hands of state officials. Unnamed sources claimed to spot him in Hong Kong late last year, but other than that, the only sighting is a seemingly scripted videotape and a philanthropic school visit.
This sent BABA stock plunging, a fate which the stock has yet to recover from. Now, with rumors spouting that Ma got arrested, Alibaba investors have dumped even more shares. But Ma didn’t get arrested — so where did the rumors start?
Someone with the last name Ma got arrested in China.
China’s state broadcaster CCTV announced on Tuesday, May 3 the arrest of someone with the last name Ma. The broadcaster reported the state took “compulsory measures” against the individual. The subject happens to have the same last name as the billionaire founder of e-commerce company Alibaba.
The arrest happened in Hangzhou, where Ma famously grew up and launched his business in his apartment. Also, the state arrested the individual on charges of endangering national security through internet measures.
All of these clues led to listeners assuming Ma himself had been arrested, when in fact that wasn't the case. However, the assumption spread like wildfire and resulted in a $26 billion sell-off on Alibaba’s dual-listed stock (which is publicly traded in both Hong Kong and New York).
So, who got arrested?
If Jack Ma didn't get arrested, then who did? According to the Chinese state-run tabloid Global Times, it was a person who works at a Chinese tech company and specializes in hardware research. The man’s first name hasn't been revealed, although we know it has three Chinese characters (not two characters, like Jack Ma’s Chinese first name).
The rumor resulted in a BABA sell-off nonetheless.
Regardless of the rumor’s legitimacy, one thing is clear: Alibaba investors are anxious about the company and its public stock.
BABA stock in the U.S. fell nearly 4 percent on the news, while Hong Kong shares fell as much as 6.2 percent. Alibaba’s ADRs are down 18.67 percent YTD, with one-year losses at an even more strenuous 57.04 percent. BABA stock peaked in October 2020 and hasn't returned to a lasting upward trajectory yet.
Jack Ma is at the unfortunate meeting point of China, tech, and controversy.
The Chinese stock sell-off occurred largely as a result of hard-and-fast regulations on China’s mainland and in Hong Kong, with state-sanctioned threats to accompany them. The global tech sector is in a sell-off of its own, a category that encompasses Alibaba’s e-commerce as well as the fintech of Ma’s failed-to-go-public Ant Group.
With Ma potentially having gone missing and falsely rumored to have been arrested in Hangzhou, controversy only adds to an already unfortunate amalgam. With everything going on, it isn't a surprise that BABA strongholds wavered under the pressure.