Alibaba (NYSE:BABA) is the latest major tech company to announce job cuts recently. Indeed, Alibaba layoffs are the talk of Wall Street today after the Chinese tech giant announced cutting about 7% of its cloud unit. What’s going on with BABA stock lately?
Well, Alibaba is down more than 1% heading into the afternoon on news that it has started a new round of job cuts ahead of its upcoming initial public offerings (IPOs). According to Bloomberg, the company will offer severance to employees “or transfers to other parts of the Alibaba empire” although the moves aren’t guaranteed.
These layoffs are intended to help slim down Alibaba’s cloud sector, which the company plans on fracturing off into its own company within a year. If you recall, Alibaba Cloud is not only one of Alibaba’s most significant departments, but China’s largest cloud service. Alibaba Cloud reported annual revenue of $2.69 billion in its latest quarter, representing a 2% year-over-year (YOY) decline.
Not alone however, Alibaba plans on splitting the company up into six separate entities, including its Cainiao logistics and international commerce divisions. As of March 2023, Alibaba had more than 250,000 employees under its roster, although it’s unclear how workers are divided between departments.
What else do you need to know about Alibaba?
Alibaba Layoffs Hit Just a Week After New Company Plan Announcement
Today’s layoff news comes right on the tail of Alibaba’s major restructuring announcement last week. Indeed, Alibaba CEO Daniel Zhang recently announced that the company would “fully relinquish control” of Alibaba Cloud, along with the independent listing of nearly every aspect of its business, save its e-commerce department.
There has been plenty of speculation behind Alibaba’s unprecedented move, with many wondering whether its an attempt to concede to market forces or Chinese political nuances. China has been on something of a tech crackdown for years now, prying into the data policies of many cloud-intensive services. In 2021, Alibaba Cloud even became the subject of regulatory oversight after it reported a major software error to authorities. It also played a role in China’s largest cybersecurity data leak in 2022, further inviting the government’s gaze.
Either way, BABA stock has been on a downward slide since the company’s announcement last week, coming to a roughly 4.5% loss in that time.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
