Source: Wall Street News
Ali's split plan could serve as a model for tech giants to create value.
On Tuesday, Ali announced the launch of a “1+6+N” organizational transformation. It will establish six major business groups, including Alibaba Cloud Intelligence, Taobao and Tmall Business, and multiple business companies under Alibaba Group, and may be listed independently in the future.
“1 to 6” caused Alibaba's US stock to rise 15% against the market on Tuesday, the highest one-day gain since June last year. Star tech stocks such as Amazon and Meta fell more than 1%.
On March 29, Alibaba's stock opened nearly 15% higher. As of press release, the stock had risen more than 13%.
Wall Street analysts and media have praised Ali's split plan, saying that America's big tech giants also need to learn.
Tom Masi, portfolio manager of asset management agency GW&K, told the media:
Ali's reforms have greatly raised the market's expectations for other companies. If the reforms are in line with the direction the government wants Ali to take, and shareholders respond positively, other companies are likely to follow the same path.
Ali's stock price performance has not been good in recent years. It has fallen by about 25% over the past 12 months, and the price-earnings ratio has remained around 20 times for a long time.
Morgan Stanley analyst Gary Yu pointed out in a report on Tuesday that Ali's market capitalization is much lower than the sum of its various business divisions. Furthermore, he believes that the current price-earnings ratio of Ali does not reflect the value of its subsidiaries and certain private equity and public equity investments at all.
Moreover, this situation is not limited to Ali. Some market analysts suggest that US tech giants, including Amazon, Google, and Meta, can also boost stock prices by splitting their businesses.
Jim Osman, founder of the consulting firm The Edge Consulting Group, told the media,If Amazon can split its cloud computing and subscription services divisions, the stock price is expected to rise 70%. He also believes that Meta's WhatsApp and Instagram businesses have not been properly valued.
He greatly appreciated Ali's split plan:
If successful, Alibaba will become a model for enterprise groups to create value.
Editor/Corrine