Alibaba’s Hong Kong shares tumble after cloud unit spin-off shelved
Alibaba Group has reported second-quarter revenue of $ 47.96 billion (US$31.01 billion) – largely in line with analysts’ expectations.
However, the company’s share price fell by around 10 per cent in early trading in Hong Kong – the first market to open after the results were announced overnight – after the company revealed plans to shelve the spin-off and Hong Kong listing of its cloud services business.
The Hangzhou-based company also put on hold a listing plan for its Freshippo groceries business.
Eddie Wu, Alibaba’s CEO, said the company’s future strategy will be to focus on each of its subsidiaries facing the market more independently and that they would conduct a strategic review to distinguish between “core” and “non-core” businesses.
Alibaba chairman Joseph Tsai told a post-earnings call that the company would focus on growing its cloud business and providing investment for its artificial intelligence (AI) drivers.
Some analysts said the reversal on the spin-off would assist Alibaba’s AI push.
“The company believes the chip ban might materially and adversely affect its ability to offer products and services in the longer term. But (it) also points to the increasing importance of retaining the cloud unit given the surging demand for AI computing in China,” said US Tiger Research analyst Bo Pei.
- Reporting By Donny Kwok and Josh Ye in Hong Kong, Casey Hall in Shanghai; Writing by Anne Marie Roantree and Brenda Goh; Editing by Muralikumar Anantharaman, of Reuters.