Source: Bloomberg
Author: Drew Singer, Yiqin Shen
Alibaba Group's plan to set up six major business groups has planned to promote its stock price soaring on Tuesday, providing a potential example of global technology giants with spin -up pressure.
After Alibaba announced its organizational change plan, its US deposit certificate (ADR) closed up 14%on Tuesday, the largest single -day increase since June 2022.According to the plan, under the Alibaba Group, six major business groups and many business companies will be established, which will be listed independently with conditions.
Following China's rectification of science and technology giants for several years, Ali seems to be designed to make Chinese regulatory agencies at ease, and it may provide a template for similar companies.
"From the perspective of improving the expectations of other companies, this is an event that changes the rules of the game," said Tom MasiActive response, then other companies may follow. "
Masi said that Tencent Holdings may be the most obvious candidate because it has too many entities that can be independent.Tencent rose 8%in the United States on Tuesday.Internet retailers have risen by 4.5%, covering Baidu, which cover various businesses such as autonomous driving in the Internet by 4.7%.
Gary Yu, an analyst at Morgan Stanley, said in a report on Tuesday that the market's enthusiasm for Alibaba's strategy is worth noting, because compared with the company's various business valuations, the company has been at a deep discount.
"The overall price -earnings ratio actually means that Alibaba's main parallel subsidiaries and the value of some private equity and listed equity investment are zero," he wrote.
Although the transaction price of ADR is around $ 98, Morgan Stanley believes that as the market has begun to understand the value of its business departments, potential room is very large.Other seller analysts are also encouraged by this strategy.
Reduce monopoly
Bloomberg industry research analyst Marvin Chen said that the plan is in line with China's policy aimed at weakening the monopoly nature of technology giants.
"Although it is not uncommon for Chinese technology companies to split, it seems more tolerant, and its core business is also included, which may become a blueprint for the future of the industry," he said.
This strategy may constitute risks to its competitors.Bloomberg industry research analyst Catherine Lim wrote in the report on Tuesday that as investors turn to newly established independent subsidiaries, Meituan, JD.com, Pinduoduo and Sea LTD.Focus on companies may find investors' demand for their stock decline.
In addition, Jim Osman, the founder of the research company The Edge Consulting Group, said that the timing of Meta Platforms Inc. and Amazon may have matured dueDemolition will release value.
Osman said that if Amazon separates its cloud from the subscription service department, its value may be 70%higher than the current stock price.He said that Meta's WhatsApp and Instagram business did not obtain appropriate valuations.
