HANGZHOU, CHINA – NOVEMBER 13: Alibaba founder Jack Ma attends the 5th World Convention of Zhejiang Entrepreneurs at the Hangzhou International Expo Center on November 13, 2019 in Hangzhou, Zhejiang Province of China.

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GUANGZHOU, China – Jack Ma, Alibaba’s high profile founder, appears to be on the wrong side of the Chinese government, sparking a chain of events that has increased regulatory scrutiny over the e-commerce giant and cast uncertainty about its future.

Even after Alibaba reported earnings for the December quarter that were above expectations, analysts and experts warned that Ma’s friction with Beijing could hurt growth.

“Investors are taking a much closer look at Alibaba after being drawn to the founder’s growth story and global profile,” Tech Titans of China writer Rebecca Fannin told CNBC via email.

“The current friction is a new reality for investors who may not have carefully considered how the company’s rise as a powerful tech titan could pose a threat to the status quo.”

It started in October when Ma made some negative comments on China’s financial regulators a few days before the Ant Group went public in Shanghai and Hong Kong, the largest in the world. Ma also founded the Ant Group and Alibaba owns about a third of the company.

There are now two main problems. First, this Ant Group could be forced to restructure and even downsize some of their businesses like lending that drove their growth. Such steps could seriously affect the assessment. The second concern is whether regulators could force Alibaba to break up or change parts of the core business of trading, which is the biggest driver of profit.

“Right now, the biggest risk appears to be investor confidence in the Alibaba brand and ecosystem,” Neil Campling, director of technology, media and telecommunications research at Mirabaud Securities, told CNBC via email.

“But if there is tighter regulation for the main drivers of the Alibaba platform, it could certainly curb Alibaba’s growth. Ultimately, innovation and intricate weaving of the various aspects of the ecosystem together lead to economies of scale and growth.”

Campling has a long-term buy rating on Alibaba’s stock.

Just “noise” for long-term investors

Fannin believes Ma’s friction with Beijing will “ease,” but it will take some “agility on the part of Alibaba to cope with government pressures, changing consumer needs in a digital economy, and investor concerns.”

Alibaba’s US-listed stock has been under pressure since the Ant Group went public, falling from a record high of $ 317.14 on October 27 to $ 254.50 at close of trading on Tuesday, a decline of nearly 20%.

However, some analysts and investors remain optimistic.

Mizuho raised its target price on the stock Tuesday to $ 285 from $ 270, saying the stock is (attractive as the regulatory overhang is largely priced in).

Matthew Schopfer, head of research at Infusive, an asset manager invested in Alibaba, said recent concerns about the tech giant “will prove to be noise for the long-term investor.”

“Alibaba is a leading example of China’s technological prowess, and we don’t expect the government to permanently damage business. Furthermore, tighter regulation will only further solidify scale players like Alibaba,” Schopfer told CNBC via email.

“When we get to the other side of this regulatory headwind, we think the market will once again focus on Alibaba and its platforms as an important part of everyday life in China and a major beneficiary of the growth in Chinese purchasing power and the increasing digitization of consumption.”