"Come on, baby, let's start anew," Alibaba (
BABA) sang in a new hit-single released on Tuesday, with most believing it won't be hard to pull off for the company. Investors were certainly "down dooby doo down down" for the move, sending shares of the Chinese tech giant
soaring 14% during the session. Chinese tech stocks
rose in tandem, including JD.com (
JD), NetEase (
NTES) and Tencent (
OTCPK:TCEHY), as well as Japanese tech conglomerate SoftBank (
OTCPK:SFTBY), which was one of Alibaba's
key early investors.
The plan: Alibaba will split into
six different units covering e-commerce, media and the cloud, with the goal of boosting each group's individual business value. They include: 1) Cloud Intelligence, 2) Taobao Tmall Business, 3) Local Services, 4) Global Digital Business, 5) Cainiao Smart Logistics, and 6) Digital Media and Entertainment. "Under this plan, we will have six major business groups and other investments, each to be independently managed by its own chief executive officer and board of directors," according to a regulatory filing. Aside from Taobao Tmall Business, which will remain fully owned by Alibaba (
BABA), each of the other business groups "will also have the flexibility to raise outside capital and potentially to seek its own IPO."
"With such an obvious and unexpected catalyst on our hands, it pays to explore what exactly this new development could do for BABA shareholders," wrote SA contributor
Growth at a Good Price. He explores
how to play the restructuring, while other SA authors are also bullish on the announcement. See
Alibaba Drops A Bombshell by Investing Group author
Jonathan Weber, as well as
Alibaba Group: A Great Move Aimed At Boosting Shareholder Value by
Daniel Jones.
Go deeper: The reorganization follows years-long headwinds for Alibaba shares, including a slowing economy in China and geopolitical tensions, as well as a broad tech selloff and sweeping crackdown on Chinese internet companies. In fact, the announcement came a day after the company's legendary founder, Jack Ma, made his
first appearance in mainland China after several months overseas, and has generally been out of the public eye since he gave a speech in 2020 that criticized Beijing's financial and business regulators. It also raises questions about what may happen with the
suspended record IPO of Ant Group, which operates one of China's biggest mobile pay apps called Alipay (Alibaba owns 33% of Ant). (
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