Alibaba shares plunge as much as 10% after canceling plans to spin off cloud unit

abcnews.go.com:

Shares of Chinese e-commerce firm Alibaba Group Holding plunged as much as 10% in New York after it said Thursday it scrapped plans to spin off its cloud business because of uncertainties related to U.S. chip restrictions

HONG KONG — Shares of Chinese e-commerce firm Alibaba Group Holding plunged as much as 10% in New York after it said Thursday that plans to spin off its cloud business were scrapped, citing uncertainties due to U.S. chip restrictions.

Alibaba Chairman Joe Tsai said Thursday during an earnings call that a spinoff of its cloud unit “may not achieve the intended effect of shareholder value enhancement” because of U.S. export restrictions on advanced computing chips.

The company also said that it is putting on hold plans to list its supermarket chain Freshippo.

The move is a sharp reversal from its plans following a massive restructuring earlier this year which split the firm into six major businesses. At the time, Alibaba said that the business units would eventually be able to raise capital and go public individually as that would maximize value for shareholders.

Alibaba’s New York-listed shares were down as much as 10% following the announcement. The company’s shares have fallen over 70% from its peak in late 2020, after authorities halted the initial public offering of its financial affiliate Ant Group and increased government scrutiny of the technology industry.

Tsai said that the company will “focus on developing a sustainable growth model based on emerging AI-driven demand” for computing services.

Alibaba’s logistics unit Cainiao Smart Logistics had in August submitted documents for an IPO on the Hong Kong stock exchange, and the company was “confident of the business fundamentals” of the logistics