Major transformation - Alibaba Group for IPOs ! Alibaba Group | Rakuten Trade Ideas 🎯

Major transformation - Alibaba Group for IPOs !

Alibaba Group Holdings Ltd (BABA) is planning to split into six units: Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group, Digital Media and Entertainment Group. Alibaba said the decision to split up the business is the most significant restructuring in its 24-years history.

The fundamental purpose of this reform is to explore fundraising or listings for most of them. The company mentioned that five of the six units created by the move will explore raising fresh funding and initial public offering (IPO) options. The exception would be Taobao Tmall Commerce Group, which handles China commerce businesses and will remain a wholly owned unit of Alibaba Group.

Alibaba Chief Executive Daniel Zhang said that the original intention of this reform is to make the company more agile, shorten decision-making links and respond faster. Each of the six businesses will have a CEO and a board of directors, and the company will “lighten and thin” its middle and back-office functions.

Analysts believe that the split signals the clearing of regulatory worries and eases concerns that Alibaba has lost the potential to grow. The reorganization also comes at a time when there are signs that Beijing is warming back up to the technology business as the government seeks to revive economic growth in the world’s second-largest economy.

Overall, Daniel Zhang is set to continue to lead the cloud-computing division as the company gears up to grow its business in global markets and the AI arena.

The share price of Alibaba is down -15.69% year-to-date (1-year), and the last price was US$98.40

Bloomberg consensus rating has 51 Buys, 4 Holds, and 1 Sell with a 12-month target price of US$142.38

Sources: CNBC, Reuters, The Wall Street Journal

As at 9pm, Dow Jones Futures 32,835 (+0.76%).

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