Alibaba Stock Falls, and JP Morgan Calls Q4 Performance a “Philosophical” Strategic Shift

Alibaba Stock

Alibaba (NYSE:BABA)

Even though investment firm J.P. Morgan said that the company’s fourth-quarter results suggest a “philosophical change” in the company’s corporate, e-commerce, and investor communications strategies, Alibaba stock fell by around 1% in pre-market trade on Friday.

As it starts breaking into six independent pieces, a team of analysts led by Alex Yao said that the findings demonstrate a “serious intention” on the business side to unlock shareholder value in an intelligent and cost-effective method.

Alibaba (NYSE:BABA) Chairman and CEO Daniel Zhang said Thursday that the firm’s board has authorized a complete spin-off of the Cloud Intelligence Group to shareholders, with the goal of it ultimately becoming an independent public business.

According to the experts, the firm’s management “has sharpened its focus” regarding e-commerce, and their only concern is the growth of Taobao’s market share.

According to the analysts’ written statement, “In our view, the new e-commerce strategy could lead to downside risk to near-term earnings estimates.” “However, we believe that the new corporate strategy will significantly more than offset the negative impact on the stock price that may result from potential earnings cuts.”

The analysts said that even though the near-term stock price is likely tied to geopolitical risk, the recovery of China’s economy, and the company’s earnings risk, the current stock price does not reflect the corporate split. This is the case even if the large investment in Taobao does not produce a return.

At the beginning of this month, Trudy Dai, the Chief Executive Officer of Taobao Tmall Commerce Group, said at a conference that the company will make “huge, historic” investments in Taobao.

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