Alibaba Group’s Hong Kong-listed shares tanked 10% Friday after the Chinese e-commerce juggernaut abandoned plans to spin off its cloud business, immediately dragging the company’s market valuation below $200 billion.
Alibaba shares in Hong Kong plummeted 10% to $9.38 (HKD 73.15) as of 9:30 am GST Friday from the previous day’s closing price of $10.4.
The stock crash wiped out a hefty $21.6 billion in the company’s market valuation to $192.6 billion as of November 17, 2023, from $214.2 billion from the previous session, according to Forbes Middle East’s calculation.
Meanwhile, the company’s US-listed shares lost 9.1% to $79.1 at market close on Thursday following the news.
37.7%. That’s how much Alibaba’s Hong Kong-listed shares have lost from its 2023 peak of $15.07 on January 26 compared to Friday’s price. In market value terms,Alibaba’s valuation is now down by $116.8 billion from its 2023 high of $309.4 billion.
The crash in Alibaba’s stocks comes a day after it reported financial results for the September quarter, where it logged a 9% year-on-year increase in revenues to $31 billion (RMB 224.8 billion), in line with analyst estimates.
However, the strong performance was overshadowed by the company’s decision to scrap plans to spin off its Cloud Intelligence Group (CIG) unit in view of “the recent expansion of US restrictions on the export of advanced computing chips,” which has created uncertainties for the cloud business, Alibaba said in its earnings report.
Alibaba also paused its plan to list its grocery chain Freshippo (Hema) due to market conditions.
Meanwhile, the company’s logistics arm, Cainiao Smart Logistics Network Limited, is going ahead with an initial public offering (IPO) in Hong Kong.
These plans were part of a restructuring strategy of the group, announced in March this year, to split into six units: Digital Media and Entertainment Group, Local Services Group, Taobao Tmall Commerce Group, Cainiao Smart Logistics Group, Global Digital Commerce Group, and Cloud Intelligence Group.
Forbes estimates Alibaba cofounder Jack Ma’s net worth to be $25.1 billion as of November 17, 2023. Ma, who was once China’s wealthiest person and has been on and off the spotlight in recent years, now places seventh position on this year’s Forbes list of China’s 100 Richest.