Alibaba (NYSE:BABA) stock is trending on social media and sinking about 4% in early trading after the company announced the departure of its CEO, Daniel Zhang. Replacing Zhang at the hem of the Chinese firm will be Eddie Yongming Wu, a co-founder of Alibaba who’s currently serving as chairman of BABA’s Taobao and Tmall Group. The latter businesses constitute the firm’s domestic e-commerce operation.
More About the Transition
Zhang will step down from the CEO role, effective Sept. 10. In addition to Wu’s experience at Taobao and Tmall Group. he also has expertise in “monetization and technology.” Additionally, he has served as Chief Technology Officer of Taobao and the company’s payments unit, Alipay, and oversaw the monetization efforts of Taobao and Tmall.
After Sept. 10, Zhang will concentrate on improving the company’s cloud unit. The unit, which remains unprofitable many years after its launch and suffered a significant outage late in 2022, is expected to be spun off later this year. Its revenue also dropped in the first quarter versus the same period a year earlier. Also noteworthy is that the unit is expected to launch an initial public offering (IPO).
In conjunction with the CEO transition, BABA Executive Vice Chairman Joseph Tsai will take over Zhang’s chairman role. Tsai previously served as BABA’s CFO and owns the Brooklyn Nets, an NBA team.
Background on Alibaba
In March, Alibaba announced it intends to split into six “business groups.” Each of the groups will have separate CEOs and boards.
Alibaba co-founder Jack Ma, who served as its CEO for many years, recently urged the company to focus on its domestic e-commerce business. Some commentators see the CEO transition announced today as an effort to follow that advice.
BABA Stock: What Investors Should Be Watching
Investors should try to determine the extent to which the changes boost BABA’s cloud and e-commerce businesses going forward.
On the date of publication, Larry Ramer did not have (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.
