Important events
Jun 212023
BABA: CEO and Chairman of Alibaba to Step Down
- The chairman and CEO of Alibaba has announced he will step down, causing its share price to drop 4.5% on Wednesday.
- It’s likely part of Alibaba’s plans to split into 6 separate units, which was announced in March this year.
- Alibaba’s cloud computing unit which Zhang will now focus on, is aiming for a public listing in the next 12 months.
The CEO and chairman of Chinese e-commerce giant Alibaba, Daniel Zhang, has announced that he will step down from both roles so that he can focus on the company’s cloud computing unit. The move is likely part of the restructuring involved in the company’s plans to split into six separate businesses, which was announced in March this year. The role of Alibaba’s CEO will now be handed to Eddie Yongming Wu. The announcement caused BABA to fall by more than 4.5% in premarket trading on Wednesday.
In recent years, Alibaba has also been coming under increasing regulatory scrutiny by the Chinese government – something which has been noticed by investors and has harmed the company’s share price over the last three years. Its CEO’s departure however, took investors by surprise, as Zhang had been serving in the role for the past 8 years. And with several of Alibaba’s newly divided business units pursuing IPO’s, there could be further turbulence for Alibaba in the year ahead. The cloud computing unit which Zhang will now focus on is estimated to be worth around $50bn, and is aiming for a public listing in the next twelve months.
(About Alibaba)
Alibaba is a Chinese multinational conglomerate specializing in e-commerce, technology, and various other sectors. Founded in 1999 by Jack Ma and headquartered in Hangzhou, China, Alibaba has grown to become one of the world's largest and most valuable companies. At its core, Alibaba operates three main platforms: Taobao, Tmall, and Alibaba.com. Taobao is a consumer-to-consumer marketplace, while Tmall focuses on business-to-consumer transactions. Alibaba.com is an online platform that connects businesses worldwide, facilitating international trade. These platforms have revolutionized the way people buy and sell goods in China and have played a significant role in the growth of e-commerce in the country.
Alibabagroup
May 262023
BABA: Alibaba Turns Layoff Rumors On Their Head, Announces Hiring Effort
- Alibaba has announced that it will hire 15,000 employees as part of its splitting of the business into 6 separate companies.
- One aspect of the business, its cloud computing unit, will however let go of around 7% of its staff.
- The company’s share price has now erased most of the gains it had made from the announcement of the split
After rumors circulated that Alibaba was preparing to lay off roughly 20% of its workforce, the company has now turned them on their head by announcing plans to hire around 15,000 employees. The Chinese e-commerce giant is moving ahead with its plan announced this year to split the business into 6 separate components.
One aspect of the business, its cloud computing unit, is however undergoing a round of layoffs which will see 7% of its employees let go – which is reportedly being done in preparation for an upcoming IPO for the segment.
As for the company’s share price, BABA logged a 3% drop yesterday on news of the hirings. The company has erased most of the gains it made as a result of announcing the business split in March. Since the start of the year, Alibaba’s share price has dropped by over 13% – and announcing a potentially costly hiring spree isn’t doing much to restore investor confidence. Needless to say, the share price is also still substantially from its covid-fuelled heights of late 2020.
(About Alibaba)
Alibaba Group Holding Limited, commonly known as Alibaba, is a multinational conglomerate and one of the world's largest e-commerce and technology companies. Founded in 1999 by Jack Ma and a group of entrepreneurs in Hangzhou, China, Alibaba has since grown into a global powerhouse with a diverse range of businesses. At its core, Alibaba operates several online marketplaces, including the popular platforms Taobao and Tmall, which connect businesses and consumers in China and around the world. These platforms facilitate a wide array of transactions, from retail sales to business-to-business commerce. In addition to its e-commerce operations, Alibaba offers various services such as digital payment solutions (Alipay), cloud computing (Alibaba Cloud), logistics and supply chain management (Cainiao), entertainment (Alibaba Pictures), and more.
Illustration by TradingView
Apr 132023
BABA: SoftBank Sells Majority of Alibaba Shares Causing Price Drop
- SoftBank has sold the majority of its stake in Chinese ecommerce platform Alibaba for $7.2bn.
- Only 3 years ago, SoftBank held a 25% stake in the company when it was valued at $100bn.
- Last month, Alibaba shares rocketed on news that the company would be split into 6 segments.
Japanese investment bank SoftBank has reportedly sold roughly $7.2bn worth of shares in Chinese ecommerce giant Alibaba, which represents the majority of Softbank’s stake in the company. SoftBank now only holds a 3.8% stake in Alibaba, despite holding as much as a 25% stake three years ago.
Investors in Alibaba were quick to react to the news, with BABA dropping by 6% yesterday. The share price has since recovered, but the hesitation shown by the major investor has somewhat shaken confidence.
Where does Alibaba stand?
The price dip comes just weeks after its shares were rocketing upwards on the news that the company would be split into 6 separate entities as a result of Chinese regulatory bodies easing off on restrictions on the company. And from a wider perspective, Alibaba’s position seems to be strong despite SoftBank's sell off.
SoftBank’s hesitation. BABA has seen a price increase of 23% over the last 6 months, and now sits at an impressive market cap of around $268bn. Alibaba Cloud, a subsidiary of the company, also unveiled its ChatGPT competitor this week, as part of its effort to gain a further foothold in the AI market.
SoftBank’s hesitation
The selloff of its stake might have more to do with SoftBank’s position than the performance of Alibaba. In February, the bank posted its fourth consecutive quarter of loss – posting a loss of $5bn for its most recent quarter. It also reported a significant decline in follow-on investments in 2022 compared to 2021. This might explain their hesitation to hold on to the shares, as Alibaba seems to be maintaining a fairly positive outlook for the year ahead.
愚木混株 cdd20 / Unsplash
Mar 292023
BABA: Alibaba Shares Move Upwards After Announcement of Breakup Plan
- Chinese e-commerce giant Alibaba has announced it will split into six separate company units.
- The move signaled the easing of government regulation of the space and caused a 14% jump in BABA.
- It also caused other Chinese stocks to move upwards including SoftBank, which owns 13.7% of Alibaba.
E-commerce company Alibaba sent optimism through the Chinese tech sector this week, which has been in a bit of a slump recently amid concerns surrounding the government’s heavy handed approach to its growth. A new restructuring plan announced by the Jack Ma-founded company has investors thinking that the Chinese government might ease up on some of its regulation and allow stocks some room to grow.
What happened?
Alibaba announced yesterday that the company plans to split into 6 separate units and seek funding and listings for the majority of them. The move had a significant impact on its share price, causing a 14% jump on Tuesday in its US listed shares, as this had been the first major sign of China easing its regulatory scrutiny of the company. The main unit of Alibaba will restructure to become the holding company of its other units, and Daniel Zhang will also remain as the company’s CEO – a position he has held for almost 8 years.
Positive signs
It wasn’t just Alibaba’s share price enjoying the optimistic outlook, other Chinese stocks were heading upwards on the news. In particular SoftBank, which owns a 13.7% share of Alibaba, also jumped by 6% today. Although its shares are still down by 25% from its 2022 high in November. Other Chinese stocks were also moving upwards, including internet technology company Tencent which saw a 4.24% jump. Despite the optimism, Alibaba will still be under Beijing’s watchful eye – as the company has been accused by regulators in the past of monopolizing the e-commerce industry.
SIMON LEE / Unsplash
Nov 182022
Covid continues to curtail
China’s zero-covid policy has been tough on retail businesses, and some now think that the last glimmer of hope has faded.- Alibaba’s quarterly earnings weren’t exactly what investors were hoping for. The Chinese e-commerce giant reported that revenue grew to ¥207.18bn ($29bn) over Q3, missing analyst expectations of ¥208.62bn ($29.2bn). That wasn’t the company’s biggest problem though.
- The kicker was the fact that customer revenue fell by 7% YoY, which marks the steepest-ever decline in that segment which usually accounts for 30% of the company’s revenue. Alibaba’s CEO blamed reduced consumer demand and disrupted logistics due to covid restrictions.
- Chinese internet stocks have had a lot to put up with this year, plummeting earlier this month on news that the government would be ramping up regulation of the sector dramatically. If that wasn’t enough, some now think that China’s potential easing of zero-covid policies was a flash in the pan affair.
Alibabagroup
Aug 022022
Alibaba strives to outrun delisting threats
Alibaba is confirming its commitment to a US listing despite regulators putting the company on their watchlist.- Alibaba shares ended July with a whimper, closing down over 21% for the month. The losses were accentuated by a 11% decline on Friday, which came after the SEC put Alibaba on its list of Chinese companies that might be delisted in 2024.
- But BABA says “we won’t go down that easy”. The e-commerce platform on Monday sent shares inching up by just over 1% after it committed to doing everything possible to maintain its listing status in both the US and Hong Kong.
- That being said, it’s kinda out of their hands tbh. The SEC basically wants more info from annual audits, but China has blocked its companies and accountants from giving foreign regulators access to audit files – so Alibaba’s fate is largely down to whether Washington and Beijing can come to an agreement.
tommao wang / Unsplash
Jul 262022
Dual-listing delights
Alibaba is hoping that its dual-listing plans might help the company overcome its failed attempt at US domination.- Alibaba is applying for a dual primary listing in Hong Kong. The tech giant already has its shares traded on both the US and Hong Kong exchanges, but this secondary listing (if it goes through as planned) could make Alibaba the first big company with primary listings in both New York and Hong Hong.
- Shares popped 6% in extended trading and 4.5% in Hong Kong trading on Tuesday, buoyed by the idea that a dual listing would open up a huge pool of potential investors on mainland China for the first time. It also means if something goes wrong (like another massive fine perhaps) that the stock will still have liquidity in Hong Kong.
- Buuuut Monday’s developments weren’t all good. Alibaba also has plans to scale back its global expansion plans into the US, which began three years ago and aimed to dethrone Amazon as the e-commerce king, but has failed to meet targets to sign up 1m local US businesses.
Chi Hung Wong / Unsplash
Jun 202022
Alibaba’s given a glimmer of hope
Alibaba gets all those Friday feels from a day of exciting news out of China’s central bank, which is good because competition is heating up.- The Ant Group’s IPO looks like it could make a comeback. The People’s Bank of China last week accepted its application to form a financial holding company, suggesting a chillaxing of the regulatory pressure that forced the company (which is Alibaba’s sister brand) to delay its November 2020 IPO.
- Alibaba shares popped and dropped on Friday, surging 9.2% before sinking to close up only 0.78%. Thanks to a carousel of bad news in the last few years for the Chinese tech industry, shares are now trading down nearly 68% from the ATH they reached in October 2020, just before the Ant IPO fail – other tech brands impacted by the crackdown rallied on Friday as well.
- But JD.com is coming for BABA’s food delivery domination. The Chinese e-commerce giant is considering expanding into the food delivery business, which is booming in the region. It’ll put them in direct competition with Alibaba and Meituan, who right now are the top dogs of food delivery. So, a lot is in the air for Jack Ma’s babies then.
bfishadow / Flickr
May 312022
It’s open sesame for Alibaba
Mega-brand Alibaba has been given a much-needed boost after news Chinese covid restrictions could be easing.
Alejandro Luengo / Unsplash
Apr 052022
Chinese stocks arrive at cooperation station
Ok, we’ve finally got some good news for US-listed Chinese stocks, but will it be enough to wipe out recent reversals? Looks good so far.- Chinese US-listed stocks were sent on a rally on Monday after a truly tumultuous year. Alibaba lifted 6.62%, JD.com and Tencent both jumped over 7.14%, Baidu bounded nearly 10%, and XPeng was up 8%.
- China has signaled support for US-listed companies. The state has removed a key hurdle in regulation that stops the US from accessing the full audits of Chinese firms listed over there, after the SEC said that they may have to delist otherwise. Insert sigh of relief.
- The two have been at regulatory odds for over two decades now, and investors have been paying the price of plummeting shares and ongoing uncertainty, so you can see why the rally ensued. However, China Beige Book International warns: “Global investors may be jumping the gun a little bit. Everything is very, very premature right now.”
Alejandro Luengo / Unsplash
Mar 222022
BABA’s buyback bliss
Alibaba has been through some serious crests and troughs this month, but it’s hoping a new buyback program will help renew investors’ confidence.🔍 Key points:
- Alibaba saw its shares jump 11% in morning trading on Tuesday after the Chinese tech giant upped the size of its buyback program from $15bn to $25bn.
- It’s trying to keep investors keen in the face of a record slump, which has taken the stock to near seven-year lows. A buyback reduces the number of shares out there, therefore theoretically increasing their value.
- But will it work? Alibaba has spent more on share buybacks than any other tech company since a crackdown in Beijing started the sector’s decline in late 2020. This one marks its third, and yet its prices are still sitting more than 60% down from its ATH.
Illustration by TradingView
Mar 172022
Chinese stocks are back with a vengeance
Upbeat capital markets comments from Beijing spark a dramatic turnaround in Chinese stocks, which were absolutely battered earlier this week.🔍 Key points:
- China’s top financial policy body pledged to keep its capital markets steady by chilling out on the crackdown front, supporting overseas stock listings, and assisting property and technology companies – it follows a sharp selloff that saw Chinese shares erase over $200bn in value in only three days to take prices to multiyear lows.
- US-listed stocks had their best day since 2001 on Wednesday. The Nasdaq’s Golden Dragon China Index gained an eye-watering 33%, Alibaba bounced nearly 37%, JD.com and Baidu bounded ahead nearly 40%, and Pinduoduo popped 56%.
- But tech stocks are still haunted by ghosts of crackdowns past. Both Alibaba and Tencent are reportedly planning to cut tens of thousands of jobs in their first major round of layoffs since Chinese regulators targeted the brands. Alibaba is expected to cut up to 15% of its staff, potentially helping its rally yesterday, in an effort to release pressure on its balance sheet.
Jason Leung / Unsplash
Feb 252022
Alibaba reports record low revenue growth
Despite beating estimates with its fiscal third quarter results, Alibaba reports slowing revenue growth that leaves investors feeling dubious about the future.Key points:
- Prices dumped nearly 7% in morning trading on Thursday to touch a three-year low, before curtailing losses to close down 0.72% thanks to a broader market recovery. Alibaba just beat on earnings estimates with CNY16.87 ($2.65) per share, but missed on revenue with CNY242.58bn ($28.06bn).
- Both the top and bottom lines are seeing a serious slowdown. Earnings were down 23% y-o-y and revenue growth of 10% was its worst since going public – the organization is still struggling to conquer macroeconomic headwinds in China, as well as heightened competition in the e-commerce space and tightening regulation in the tech sector.
- Its e-commerce business was important to investors, but the local market produced disappointing results – Chinese commerce profits (a massive source of revenue) fell 20% y-o-y, though on the plus side, international commerce saw growth of 18%. It’s looking to diversify the business though, possibly into food delivery, so there may be new sources of revenue to rely on soon.
Illustration by TradingView
Jan 192022
Alibaba gets its head taken out of the clouds
The Biden administration has its eyes set on Alibaba’s cloud unit as its next target, but can the stock handle another blow?- The stock dropped around 3% to start a reversal on any gains from last week’s news that Didi Global (DIDI) could IPO in Hong Kong as soon as Q2.
- Lawmakers are investigating whether the cloud division is a threat to national security, and will focus on how the business uses U.S. client data (and whether the Chinese state might be stealing it).
- It could ban Alibaba Cloud from operating in the U.S. as it accelerates its scrutiny of Chinese U.S.-listed firms amid an ongoing trade dispute between the two countries.
Engin Akyurt / Unsplash
Jan 052022
It’s a Fine New Year
If Alibaba investors thought a new year would mean a new regulatory attitude, they’ve just been set straight.- China continues its regulatory crackdown into 2022 with brand new fines for Alibaba, Tencent and Billbilli. It’s accusing the tech giants of breaking anti monopoly laws by not reporting up to a dozen new deals last year.
- Alibaba has lost over 53% since China’s top regulator first opened a probe into the Ant Ma group on Christmas Eve 2020.
- Not everyone is spooked though. Charlie Munger’s Daily Journal has nearly doubled its Alibaba investment in the past year, while its other holdings have stayed unchanged.
Tim Zankert / Unsplash
Dec 302021
Alibaba wants to dump Weibo
Alibaba flirts with an all-time low as it considers dumping its stake in Weibo.- Prices dropped 2.4% on Wednesday, now down over 12% for December.
- It might sell its 30% stake in Chinese social media giant Weibo to a state-owned media group as the government tries to curb the control of big tech in the region.
- It’s not all doom and gloom. Chinese regulators dropped an early Christmas present on December 24, finally legitimizing a legal loophole that lets Chinese companies list internationally – so any U.S. delisting fears have been waylaid for now.
Illustration by TradingView
Dec 062021
Baba makes moves
Alibaba is going through a major overhaul of its e-commerce business, including a serious management shake-up.- Alibaba names Toby Xu as its new CFO as a part of a business restructure that will split up its international and Chinese digital commerce divisions.
- It’s trying to become more agile and accelerate growth as it faces a slowing economy, growing competition, and a regulatory crackdown. Didi Global (DIDI) is delisting in the U.S. as China makes international listings harder – is Alibaba next?
- It’s trading at its lowest levels since Spring 2017, down 30% since disastrous earnings on November 18.
Nov 262021
Analysts lose the love for Alibaba
Poor old Alibaba has been having a terrible year, losing half its value since September 2020. And this week’s news doesn't bring any comfort.- Its Wall Street price target has dropped for the 18th week in a row, as more and more analysts slash their expectations.
- It posted disappointing earnings last week, missing expectations and trimming revenue guidance.
- The price has lost almost 19% over the past two weeks, currently sitting at $136.52.
Nov 232021
Baba gets bulldozed again
Chinese retail stocks are getting chucked out the basket after regulators release the latest series of antitrust fines.- Regulators fined Alibaba, Tencent (700), and Baidu (BIDU) (among others) for a slew of antitrust violations dating all the way back to 2012 – all three edged down in Monday trading.
- It’s the latest in a long line of crackdowns that have spooked investors this year. The MSCI China has lost 13% in 2021 so far, compared with a 27% jump for the S&P 500.
- Analysts think the crackdown could last years, but are still bullish on long-term growth prospects.
Illustration by TradingView
Oct 292021
Alibaba expands its European investment
As the European e-commerce market booms, Alibaba will be competing with Amazon and expanding its European operations ahead of this years’ Singles Day.While Amazon is the clear current winner of the hearts and wallets of the European people, Alibaba makes it clear it will be muscling into the territory and investing heavily in operations before Singles Day this year. Singles Day is a Chinese holiday that celebrates people not in relationships and sees a rush of shopping and sales – like the Chinese version of Black Friday. A bunch of businesses on Alibaba have expanded into the European region recently, where the e-commerce industry is growing rapidly – NielsenIQ said in a report in June:
It’s time for the next stage of e-commerce growth in Europe.
Overtaking Amazon might not be such a stretch, given that Alibaba is already a top three shopping platform in eastern Europe, where Amazon hasn’t even cracked the top 10.
