Alibaba, Baidu lead Chinese tech stocks south as downgrades say it's time to sell
Andrew Burton/Getty Images News

Chinese Internet companies started the week off on a sour note, Monday, with big losses coming from Baidu (NASDAQ:BIDU), Alibaba (NYSE:BABA) and others following a slate of stock-ratings cuts from analysts at J.P. Morgan.
Alibaba (BABA) shares dropped more than 10%, while Baidu (BIDU) ended the day down by more than 8%, JD.com (NASDAQ:JD) shares also fell by 10.5%, and Pinduoduo (NASDAQ:PDD)
slumped more than 20% as J.P. Morgan analysts cut their ratings and stock-price targets on all four companies to what is the equivalent of sell.
Analyst Alex Yao cut his rating on Alibaba (BABA) to underweight, and slice his price target on the company's stock to $65 a share from $180. Yao said Alibaba (BABA) is likely to continue to suffer from what he called "geopolitical and macro risks", as the company in effect serves as "a proxy" for online use and business in China.
Yao also took down his view of Baidu (BIDU) to underweight, and slashed his price target on the company's stock to $90 a share from $245. Yao was uniformly negative about Baidu (BIDU), saying that the expected long-term driver of the company's business, autonomous driving, is "unlikely to save the day"
Yao said that autonomous driving will not drive interest in the company's technology over the next six months, and is likely to benefit Baidu (BIDU) only starting in 2024 or 2025.
Analyst Andre Chang cut JD.com (JD) to underweight, and brought down his target price on the company's stock to $35 a share from $100. Chang said there are growing concerns about JD's (JD) valuation, as investors re-evaluate their Chinese investment strategies. Chang added that even though the company has some of the best growth in its space, "We are afraid" that investors won't stop selling JD's (JD) share over the near term.
Chang also cut his rating on Pinduoduo (PDD) to underweight with a price target of $23 a share. Chang said that Pinduoduo (PDD) is likely to "outgrow" China's e-commerce market in the years ahead, but for now, "progress may be limited" as investors remain cautious about a lack of visibility into Pinduoduo's (PDD) ability to sustain business growth.
Along with the Morgan analysts' new negative views, Chinese stock market was on edge after an increase in COVID-19 cases in the city of Shenzhen led local officials to lock down the city, and its general region, overnight.