What's Going On With Alibaba Stock Thursday?

Zinger Key Points
  • Analysts view Alibaba's management reshuffle as a move to streamline operations and focus on core businesses.
  • Freshippo halts new memberships, focuses on renewals via app or at physical stores for expired memberships.

Alibaba Group Holding Limited BABA stock is trading higher Thursday as it replaced Trudy Dai, a founding partner, with CEO Eddie Wu as the head of its core Chinese e-commerce platforms, Tmall and Taobao.

The move marked Alibaba's strategy to recover from recent challenges, including intensifying competition from PDD Holdings Inc PDD.

Alibaba is now focusing on recovering its position in cloud and e-commerce.

Li Chengdong, head of the Beijing-based Internet think tank Haitun, commented on Alibaba's strategy, saying, "Alibaba wants to go into battle with a light pack, and this is a way to handle a lot of its more burdensome and non-core businesses. 

These hinder the overall competitiveness and flexibility of the company," Bloomberg reports.

Jeffrey Towson, a partner at TechMoat Consulting, emphasized the need for strong leadership in Alibaba's e-commerce sector, stating, "A threatened e-commerce business is a problem for the whole company. They need a wartime CEO for e-commerce."

Willer Chen, a research analyst at Forsyth Barr Asia, provided insights on the company's restructuring, noting, "This is another big step to reverse Alibaba's previous plan to split up under Daniel Zhang. Now Wu will take control of the group, cloud, and Taobao-Tmall, with more consolidation of power to the group level. There could be more sales of non-core assets looking ahead."

Meanwhile, Alibaba's supermarket chain, Freshippo (also known as Hema Fresh), has paused new membership subscriptions starting December 13, Yicai cites an insider. 

Current members can renew their subscriptions through the app, but those with expired memberships must visit Freshippo X physical stores for renewal.

By the end of December, the chain had amassed three million paid subscribers, generating an annual revenue of CNY588 million ($82.3 million). 

Members benefit from a 12 percent discount on select product categories on certain days.

A Boston Consulting Group report commissioned by Freshippo revealed a narrowing willingness to spend among China's middle class, which will likely make up 35% of the population by 2030. 

In response to this trend and intense market competition, Freshippo is shifting its focus to price competitiveness in its offline stores.

Price Action: BABA shares traded higher by 1.99% at $74.80 premarket on the last check Thursday.

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

Photo via Wikimedia Commons

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