Jack Ma, co-founder of Chinese e-commerce giant Alibaba (NYSE:BABA), backtracked on plans to sell shares after the stock’s price fell. Indeed, the news came after shares lost $41 billion in market cap.
A memo to Alibaba staff said it was coincidental that Ma’s decision to sell came the same day Alibaba scrapped a planned spinoff of its cloud division. The letter also tried to quash rumors of layoffs.
BABA Stock: The Rise and Fall
Alibaba was once one of China’s superior cloud companies. Its cloud service centers dominated China’s tech landscape as Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) do elsewhere. But those days are over.
Ma and his team, which included Joseph Tsai, now the New Jersey Nets owner, grew Alibaba from a startup to a giant enterprise until 2020. That was when China President Xi Jinping launched his “tech crackdown,” hammering the company with fines and adverse decisions. Alibaba’s value has dropped nearly 75% since then. Ma, who retired as executive chairman in 2019, now lives in Japan and teaches at the University of Tokyo.
While Ma now owns less than 5% of Alibaba’s common stock, he was seen as a primary target of the crackdown. He still has an estimated net worth of $25 billion.
Alibaba itself has seen slowing growth and a new emphasis on dividends and stock buybacks. The continuing “chip war” has also frustrated the cloud unit’s expansion efforts. Pinduoduo’s (NASDAQ:PDD) Temu and fast fashion retailer Shein have stolen Alibaba’s lead in e-commerce.
Alibaba announced in March it would break itself up into six units. This gave the stock a short-term lift, but now it may not proceed.
The Bottom Line
After years supporting the stock in my writing, I gave up and sold my own Alibaba shares in May at a loss. Like many investors, and like Jack Ma, I trusted China’s government and won’t get fooled again.
As of this writing, Dana Blankenhorn had LONG positions in AAPL, AMZN and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
