Alibaba shares sink after it shelves IPO plans for two units

Hong Kong CNN Shares in Alibaba sank as much as 7% in Hong Kong on Thursday, after the Chinese tech giant reported disappointing sales figures and announced it would suspend listings plans for two of its units.

Chairman Joseph Tsai said during an earnings call that “given the challenging market conditions,” the group was “not in a hurry” about the timing of initial public offerings (IPO) for Cainiao, its logistics arm, and Freshippo, its grocery chain.

“Market conditions currently are just not in a state where we believe we can really truly reflect the true intrinsic value of these businesses,” he said.

Alibaba said in September that it would spin off Cainiao in an IPO. Supermarket chain Freshippo’s listing plans go back much further, to July 2022, according to Reuters.

The news comes at a tough time for the tech giant. In December, the company reshuffled its top ranks after the stellar performance of a competitor caused a stir at Alibaba.

Just weeks before, co-founder Jack Ma had called for “change” at the company, after the dramatic success of rival PDD (PDD), the group behind Chinese online shopping giant Pinduoduo and US-based retail upstart Temu, rattled China’s e-commerce industry.

Ma, who co-founded Alibaba in 1999, urged employees to “pay any price and sacrifice” to help reform the company after PDD’s performance caused nervousness.

Alibaba’s quarterly earnings, released on Wednesday, appeared to bear out this trend. Its sales of $36.7 billion in the quarter that ended in December, which was 5% higher than the same period a year before, was slightly below the expectations of a group of analysts polled by Refinitiv.

Net income fell by 77% to just over $2 billion, which the company said was caused by a “decrease in income” from its operations, it said in a statement.

The company’s announcement of a $25 billion share repurchase program, which it said demonstrated its confidence in its business and cash flow outlook, also failed to ignite interest among investors. Alibaba shares in New York closed 5.9% lower on Wednesday.

“While we [applaud] the proactive … approach to strengthen market position, with intensified competition and challenging macro headwinds, any possible share gains [will] likely take time,” Citi analyst Alicia Yap wrote in a Thursday research report.

In March 2023, Alibaba announced its biggest restructuring since Ma founded the company. It was split into six separate units, including cloud, e-commerce, logistics, media and entertainment — each overseen by its own CEO and board directors, and most of them with a mandate to pursue separate listings or fundraisings.

Since then, its New York-listed shares have lost 25% of their value.

— CNN’s Laura He contributed reporting.