Alibaba’s Hong Kong-listed shares jumped 15% at the open on Wednesday after the company revealed a major restructuring that will divide the tech behemoth into six business divisions.
Alibaba’s shares on Wall Street surged overnight and closed 14.26% higher. The price of them increased 0.71% in after-hours transactions.
The choice to divide into various groups means that each will be run by its own executive board and leadership, and each can seek autonomous funding and initial public offerings (IPOs) when they are prepared.
The Chinese technology giant underwent an overhaul as a result of its ongoing growth difficulties over the previous quarters. The company lost about $600 billion from its peak in October 2020 as a result of the Chinese government’s crackdown on technology companies.
According to value investor and Warren Buffett student, Guy Spier, the stock movements are more indicative of a feeling of relief than of investors’ expectations for the company. Tech companies in Hong Kong increased in morning exchange.
Shares of Tencent increased by 3%, JD.com got close to 5%, and Baidu increased by more than 3%. In the first hour of trading, the Hang Seng Tech index rose 3.3%, setting the pace for advances across Asia-Pacific.
Alibaba’s competitors’ stock values on Wall Street moved in a way that suggested other Chinese technology firms might follow suit to grow their businesses.
Brendan Ahern, CIO of KraneShares, referred to the ADR movements seen in Tencent, JD.com, and Baidu and said, “I think investors are saying what we saw in Alibaba, really the leader in China tech, that their plans might be utilized by others.”
He pointed out that the company’s statement demonstrated that Jack Ma, the founder of Alibaba, who was recently seen in China after travelling for months, was engaged in the entire process.