Alibaba (BABA) reversed its epic drop from $120 in January to $80 on March 20, 2023. News that the china e-commerce and cloud services provider would split into six units sent BABA stock up by 17.6% last week.
Should investors who missed out chase Alibaba from here? Does the news of Alibaba seeking $20 billion for its logistics unit in Hong Kong justify buying China tech stocks?
On Mar. 28, Alibaba said it would split its $264 billion market capitalization business into six units. By splitting e-commerce, media, and cloud, the Chinese government may weaken its regulations against the firm. Markets are betting that the sum of the parts valuation of the units without regulation is worth more than the combined firm.
Separated into smaller businesses, Alibaba may grow its local services such as meal delivery, cloud, e-commerce, and media without government interference. It would unlock the discount.
Alibaba’s Hong Kong exchange listing for the units is a template that follows that of Didi Global (DIDIY) and Luckin Coffee. Those firms were de-listed from the U.S. exchange to trade on the over-the-counter markets. Their shares subsequently rose in value.
China tech is a hold. Wait for profit takers to stop selling shares before initiating a position.
