Chinese e-commerce behemoth Alibaba Group Holdings (NYSE:BABA) is still dancing to the tunes of pioneer Jack Ma, sources say. As per a Wall Street Journal report, Jack Ma orchestrated the entire plan for the reorganization of Alibaba into six separate units, even while sitting overseas. BABA stock is up 20% since the announcement of the reorganization on March 28.
Jack Ma left his position as Chairman and CEO of BABA in 2019 and has since been traveling outside of the Mainland. However, he has continued to draw significant influence on all of Alibaba’s decisions to date. Reportedly, Ma held thorough discussions with Alibaba’s top executives, including current CEO Daniel Zhang, about pushing for a split in the company.
The Chinese government’s crackdown on technology giants during the past two years is seen as one of the major reasons for the reorganization. Splitting the company into smaller, economically viable units will unlock greater shareholder value while also relaxing government scrutiny. Although the Chinese authorities have eased their inspections, tech companies continue to divest and shake off undesirable units to become a more linear organization.
Alibaba Partnership was set up in 2010 as a strategy-formulating entity, by bringing together all influential senior executives of the firm. Jack Ma and others have a significant voice in Alibaba’s strategic changes. Ma recently paid a visit to a school he founded in the city of Hangzhou, drawing considerable attention as it was his first public appearance in a long period. Also, the timing coincided with the announcement of the company’s split. Sources cite that Ma’s return to the Mainland also has political inclinations, while the country is also calling back all business tycoons to bring substantial developments to China.
Is Alibaba a Good Stock to Buy?
Alibaba was mostly considered a good investment even in the past. Considering the recent split announcement and the investor briefing that followed, Alibaba seems to be a worthwhile investment. On TipRanks too, BABA has a unanimous Strong Buy consensus rating based on 18 Buys. Also, the average Alibaba price forecast of $148.35 implies an impressive 43.5% upside potential from current levels. Meanwhile, year-to-date, BABA stock is up 12.4%.
