Alibaba shares jumps in the wake of split up
Image Source: Bloomberg
Since the Chinese tech giant Alibaba said it would split up, its stock price has gone up.
The company says that five of the six new units created by the move will look into ways to get new funding and go public for the first time.
On Tuesday, Alibaba shares went up more than 14% in New York and more than 13% in Hong Kong.
Since 2020, its shares traded in the US have dropped by almost 70% because people are worried about Beijing’s crackdown on the tech sector.
Reports say that Alibaba founder Jack Ma, who has not seen much in public in the last three years, showed up in China this week after being gone for a long time.
Alibaba said that splitting up the business is the biggest change it has made in its 24-year history.
The units will have their boards of directors and chief executives. They can raise money and try to get listed on the stock market, except for the online shopping platform Taobao Tmall Commerce Group, which will stay in Alibaba’s sole ownership.
In documents filed with the US SEC and the Hong Kong Stock Exchange, Alibaba said that the units will “capture opportunities in their respective industries and markets, thereby unlocking the value of Alibaba Group’s respective businesses.”
In a letter to staff, CEO Daniel Zhang said, “The market is the best litmus test, and each business group and company can raise money and go public when ready.”
China technology analyst Rui Ma told the BBC that investors liked the restructuring because Alibaba’s business units will be able to grow at their own pace.
She also said that each unit would be easier to run and “less likely to violate antitrust laws.”
Scott Kessler, global sector lead for technology, media, and telecommunications at investment research firm Third Bridge, said Chinese tech companies have had to deal with strict rules for years. This is why Alibaba had to change its business model.
“In the past few months, the government has been less tough on big tech companies. As a result, people are wondering if this is the start of a time when the government will stop being so much of a threat to companies and start helping them,” he said.
This week, a report in the Alibaba-owned South China Morning Post newspaper said that Mr. Ma, who started Alibaba, had just returned to China after spending more than a year abroad.
The newspaper said he met with teachers and walked through classrooms at the Yungu School in Hangzhou, where Alibaba is based.
Mr. Ma was the most famous Chinese billionaire who went missing during a crackdown on tech entrepreneurs.
Since 2020, when he said bad things about China’s financial regulators, the 58-year-old has stayed out of the spotlight. Then, in September 2019, he gave up his position as chairman of Alibaba.
Alibaba: Tech founder was seen in China after long absence
A report says that Jack Ma, the founder of Alibaba, has been seen again at a school in Hangzhou. In the past three years, Ma has been seen in public very rarely.
Since 2020, when he said bad things about China’s financial regulators, the 58-year-old has stayed out of the spotlight.
During a crackdown on tech entrepreneurs, Mr. Ma was the most famous Chinese billionaire to go missing.
The South China Morning Post says he just returned to China after spending more than a year abroad.
The newspaper, which Alibaba owns, said that he had made a short stopover in Hong Kong, where he met friends and went to the international art fair Art Basel for a short time.
It also said that Mr. Ma has been going to other countries to learn about agricultural technology, but it didn’t say why he has been out of the public eye for the past few years.
Mr. Ma used to teach English, so he went to the Yungu School in Hangzhou, where Alibaba is based, to talk to teachers and see the classrooms.
The school’s social media page says he talked about the problems artificial intelligence could cause for education.
“ChatGPT and other similar technologies are just the beginning of the AI era. Instead of letting AI control us, we should use it to solve problems,” he said.
Mr. Ma used to be the richest person in China, but in January of this year, he gave up control of the huge financial technology company Ant Group.
Some people saw it as more proof that the Chinese Communist Party didn’t like him because he was too outspoken and powerful.
At a financial conference in October 2020, Mr. Ma said that traditional banks had a “pawn-shop mentality.”
The next month, Ant planned to go public on the stock market with a £26 billion offering, which would have been the largest in the world. However, Chinese authorities canceled it at the last minute, citing “major issues” with regulating the company.
Since then, people have said they saw him in Spain, the Netherlands, Thailand, and Australia, among other places.
Last November, the Financial Times said Mr. Ma had been living in Tokyo, Japan, for six months.
Read Also: Jack Ma: Alibaba founder seen in public again
When Mr. Ma first stopped going out in public, people said he was under house arrest or being held in some other way.