Alibaba Group Holding Ltd.-ADR (NYSE:BABA) shares are trading lower Wednesday, following a decline that affected many U.S.-listed Chinese stocks.

The downward movement in Alibaba's stock is primarily influenced by a broader market sentiment driven by recent developments concerning other major Chinese companies, such as PDD Holdings (NASDAQ:PDD), the parent company of Temu.

What To Know: PDD Holdings recently released its second-quarter earnings report, revealing challenges and increased competition that could impact its near-term profits and future growth. This news triggered a sharp decline in PDD's stock, dropping more than 28%.

Despite the current pressure, Alibaba has potential catalysts on the horizon that could help investor sentiment.

The company is expected to be added to the Stock Connect program by Sept. 9, which could unlock up to $3.2 billion in liquidity across global markets. This inclusion would enable domestic institutional investors in China and Hong Kong to trade Alibaba shares without using their foreign exchange quota, potentially increasing the stock's liquidity and appeal to mainland investors.

What Else: Alibaba remains committed to advancing its artificial intelligence ambitions, which could help unlock shareholder value in the long term despite ongoing headwinds.

In its most recent fiscal first-quarter earnings report, Alibaba posted a 4% year-over-year increase in revenue to $33.47 billion, which fell short of analyst expectations of $34.81 billion. However, the company reported adjusted earnings per ADS of $2.26, surpassing the consensus estimate of $2.13.

Net income saw a significant decrease of 29% year-over-year to $3.34 billion and adjusted net income declined by 9% to $5.6 billion.

BABA Price Action: Alibaba stock closed Wednesday down 2.25%, trading at $79.62, according to Benzinga Pro.

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