After news of a restructuring plan, Alibaba shares jumped over 8% in the United States. Bloomberg cited a letter to staff that shared information about six business segments.
BABA – Weekly Chart
Alibaba was also higher on Monday after founder Jack Ma was spotted in China for the first time in over a year.
Daniel Zhang, Alibaba CEO, said the restructuring would allow each separate business to raise capital and pursue a public listing plan. Zhang also noted that it would “foster market competitiveness.”
“The market is the best litmus test, and each business group and company can pursue independent fundraising and IPOs when they are ready,” he added.
“The interests of staff will be better aligned with the relevant [business groups] under the individual stock option plans; this will create greater ownership, improving employee morale and retention.”
China previously cracked down on the tech sector, leading to Alibaba halting plans for an IPO of the Ant Group. That led to founder Jack Ma leaving the country for a year, fuelling speculation that he was out of favour with authorities.
Alibaba hopes that Ma’s return and the new business structure will arrest the company’s share price slump.
Alibaba Group’s Revised Corporate Structure
Each new business unit will have a separate board of directors, with Zhang running the holding company. The new company will aim for a “nimble structure,” with cuts to the firm’s middle and back office functions.
Traders can look for new volume coming into the stock after the stock suffered in the tech downturn.
According to data from the Ministry of Industry and Information Technology, revenue at China’s internet firms fell by around one per cent to 1.46 trillion yuan in 2022.
