BABA stock soared Tuesday as Alibaba (BABA) announced a groundbreaking move to split itself into six different companies that will operate independently and are free to raise funds and explore initial public offerings.
The China-based e-commerce titan said the six different groups will cover local services such as food delivery, along with its Cainiao logistics group as well as digital media and entertainment. They’ll also cover digital marketplaces, e-commerce and the cloud.
“At 24 years of age, Alibaba is welcoming a new opportunity for growth,” Alibaba Chief Executive Daniel Zhang, in a statement with the announcement, “The market is the best litmus test, and each business group can pursue independent fundraising and IPOs when they are ready.”
The move frees up Alibaba’s main divisions from e-commerce and media to the cloud. Further, Alibaba said the move is “designed to unlock shareholder value and foster market competitiveness.”
BABA Stock: China Loosens The Reins
BABA stock soared 9.5% to 94.16, during morning trading on the stock market today.
The reorganization comes at a time when Beijing is easing up on what has been a tough regulatory environment, mostly on China internet companies that began more than two years ago, holding back BABA stock.
Alibaba’s six business groups will have their own chief executive and report to each of their boards of directors. They will be fully responsible for their performance, Alibaba said in its statement.
Its domestic e-commerce business will remain a wholly owned unit of Alibaba, it added. Also, Zhang will continue to run the parent company.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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