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Analysts think concerns that Alibaba sells fake stuff have died down for now

On Tuesday, large investors in Alibaba will be able to dump the stock for the first time.

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The lockup on 437 million shares will expire, 180 days after the Chinese e-commerce giant went public last September. 

In a note Tuesday, however, analysts at Stifel were undeterred by the expiration and recent headlines surrounding the company, with the firm upgrading shares to "Buy" from "Hold."

Alibaba IPO Jack Ma
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Stifel's Scott Devitt wrote that the company's valuation is attractive despite recent allegations that the company sells fake goods:

"Regulatory risks surrounding counterfeit items appear to have subsided, for now," the analysts wrote. "We reduce our estimates to reflect additional conservatism beyond our initial assessment. We believe the near-term monetization transition the company faced in F3Q:15 will be converted into a stronger long-term position as Alibaba has ultimately invested in platform improvements to increase long-term search result relevance and conversion."

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The Chinese government has accused Alibaba of not doing enough to crack down on merchants selling fake goods on Taobao, its biggest online selling platform.

In another report, it emerged that Alibaba vendors allegedly pay people to buy products and then write positive reviews on them – a practice known as "brushing." After that report, shares plunged to an all-time low.

Stifel said that since regulator SAIC claimed that most of the products on Taobao were fake, Alibaba responded and cooperated with the authorities. Last month, Alibaba disclosed that it has been contacted by the SEC about one of its regulators and the SAIC.

Stifel:

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"We doubt that neither the amount of inauthentic merchandise on Alibaba nor the Chinese government’s focus on the issue has changed since the report. What has changed, in our view, is that the headline risk has been defused as Alibaba has strengthened measures against counterfeit goods and the white-paper has been removed."

Still, the big risks for the company are expanding outside China, expanding into new businesses, concentrated voting rights, and China's economic and political environment.

Since the stock's peak reached back in November, Alibaba shares are down more than 25%.

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