Why Alibaba Stock Is Trading Higher On Friday?

Cainiao Network Technology Co., the logistical powerhouse behind Alibaba Group Holding Ltd BABA, is gearing up to debut on the Hong Kong stock exchange, triggering a rally in the stock prices Friday. 

The stock also trades higher in sync with the broader indexes IShares MSCI China ETF MCHI and KraneShares Trust KraneShares CSI China Internet ETF KWEB.

Insiders suggest that the IPO could position Cainiao as one of the pioneering units of the Chinese tech giant to venture into the public domain.

While the company has set its sights on amassing a minimum of $1 billion through the share offering, the final valuation remains under wraps, Bloomberg reports. 

It's important to note that the specifics of this deal are still fluid, and the final decision is pending.

Alibaba's move towards an independent listing by Cainiao seems to be a strategic one, especially after Alibaba's unexpected declaration in March about its intention to disintegrate its business operations.

Earlier in the year, reports indicated Cainiao had been collaborating with financial giants such as Citic Securities Co, Citigroup Inc. C, and JPMorgan Chase & Co. JPM for the impending IPO. 

In a separate development, Alibaba has postponed the Hong Kong IPO of its Freshippo grocery chain. This decision stems from the current lukewarm reception of consumer stocks in China. 

For those unfamiliar with Cainiao, pledges to deliver packages within China in a day and promises global deliveries in just three days. Partnering with over 3,000 logistics entities, Cainiao operates on more than 300 international routes.

Furthermore, a recent Benzinga article highlighted that Cainiao is eyeing $2 billion from its Hong Kong listing, slated for early 2024. This move aligns with Alibaba's restructuring strategy, which has garnered significant investor attention, especially for its cloud and Cainiao divisions.

In August, Alibaba reported first-quarter FY23 revenue growth of 14% year-on-year to $32.29 billion, beating the consensus of $31.20 billion. Non-GAAP earnings per ADS of $2.40 beat the consensus of $2.02. 

Cainiao Smart Logistics Network Limited's revenue increased 34% Y/Y to $3.19 billion.

Price Action: BABA shares traded higher by 4.41% at $87.82 premarket on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.