Here's What Might Be Causing The Decline In Alibaba's Stock

Competition is a great thing, it lets you become more efficient and better at what you do. However, the American brick and mortar retailers don’t think so. In a sort of déjà vu moment, the Chinese retail giant, Alibaba Group Holding Ltd BABA is being targeted by the retail lobby in a very similar manner that they targeted Amazon in the past, the bone of contention being – state specific internet sales tax. Although it can’t be said with complete certainty, but this recent lobbying might  be the reason for the plunge that Alibaba’s shares are witnessing on Monday.  

CNBC’s David Faber recently reported on a commercial launched by the retail lobby to pressure the government in signing a legislation that will provide states with more authority to collect sales tax from internet companies.

“[…] retailers are taking aim at Alibaba. A lobbying group, whose members include Target, Best Buy and Home Depot has produced an ad urging Congress to pass legislation granting states more authority to collect internet sales taxes,” Faber said.

Faber played the commercial during the program, which asked the public to “tell the congress – close the online tax loophole before it closes the main street.”

“Alibaba is denouncing the ad, insisting it pays taxes according to the laws in the country in which it does business. Of course Amazon itself has faced the same backlash for quite some time before it sort of came around after, started housing all its distribution facilities in different states in which it was forced to pay the sales tax, but it did benefit from not paying these state sales tax in different places.”

Shares of Alibaba were recently trading at $107.08, down 4.08%.