Alibaba stock rises 10% to the news about, that the world's largest e-commerce player will split into six separate companies.
Why did you make such a decision?
this announcement was preceded by the return of head Jack Ma to China. Recall, that he disappeared from the public field and was shown only abroad (outside China) after that, how the Chinese authorities banned the IPO of his fintech ANT Group in 2020 year. The authorities were unhappy with, that large IT corporations have too wide access to personal data of the population and create risks of monopoly in consumer markets. Jack Ma, probably, decided to solve this problem, so I came to China, and Alibaba shares are rising by 10% to the news about, that the world's largest e-commerce player will split into six separate companies.
Why did you make such a decision?
this announcement was preceded by the return of head Jack Ma to China. Recall, that he disappeared from the public field and was shown only abroad (outside China) after that, how the Chinese authorities banned the IPO of his fintech ANT Group in 2020 year. The authorities were unhappy with, that large IT corporations have too wide access to personal data of the population and create risks of monopoly in consumer markets. Jack Ma, probably, decided to solve this problem, so I came to China, and
Alibaba announced the division of business.
How the holding will be divided
The public structure of Alibaba Group itself will continue to own the largest asset – Taobao Tmall Commerce Group (this includes Taobao and Tmall marketplaces). It operates in China and generates the main operating income of the holding.
The remaining five companies will be private, they may go for an IPO in the future. Now is not the best time to enter the primary market. The only one of the five segments, which consistently earns operating income, — cloud segment. The rest are unprofitable. However, the logistics division and the international e-commerce segment may soon become profitable., since the holding previously distributed a lot of losses to these structures, now they are independent. Therefore, in the future they may be attractive for investment..
And what's good for Alibaba and its shares?
Separation of assets significantly reduces the risk of regulatory interference from the Chinese authorities. He has hung over Alibaba for the past few years and continues to threaten other major Chinese corporations.. The arrival of Jack Ma is most likely connected precisely with negotiations with Chinese regulators and other large investors of Alibaba. While there are no legal details about the separation deal, but the reduction of regulatory risk will have a positive impact on the holding's shares.
Note, that regulators make claims against large corporations not only in China, but also in the US and the EU. Alibaba could be the biggest asset split in the 21st century, and this practice can be adopted by corporations and other countries, including American. Therefore, the news of Alibaba's asset split is generally positive for global equity markets..
announced the division of business.
How the holding will be divided?
The public structure of Alibaba Group itself will continue to own the largest asset – Taobao Tmall Commerce Group (this includes Taobao and Tmall marketplaces). It operates in China and generates the main operating income of the holding.
The remaining five companies will be private, they may go for an IPO in the future. Now is not the best time to enter the primary market. The only one of the five segments, which consistently earns operating income, — cloud segment. The rest are unprofitable. However, the logistics division and the international e-commerce segment may soon become profitable., since the holding previously distributed a lot of losses to these structures, now they are independent. Therefore, in the future they may be attractive for investment..
And what's good for Alibaba and its shares?
Separation of assets significantly reduces the risk of regulatory interference from the Chinese authorities. He has hung over Alibaba for the past few years and continues to threaten other major Chinese corporations.. The arrival of Jack Ma is most likely connected precisely with negotiations with Chinese regulators and other large investors of Alibaba. While there are no legal details about the separation deal, but the reduction of regulatory risk will have a positive impact on the holding's shares.
Note, that regulators make claims against large corporations not only in China, but also in the US and the EU. Alibaba could be the biggest asset split in the 21st century, and this practice can be adopted by corporations and other countries, including American. Therefore, the news of Alibaba's asset split is generally positive for global equity markets..
