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Since 2022, Zhang had been chairman and CEO of the Alibaba Cloud Intelligence Group, while simultaneously serving as both CEO of Alibaba since 2015 and its chairman since 2019. In June, it was announced that he would resign from his positions as chairman and CEO of Alibaba Group, and focus on the cloud business.
Shares of Alibaba dropped by 3.5% on Monday in reaction to the news that Daniel Zhang, who was departing the position of chairman and CEO of the Alibaba Group in June, was now also stepping down as chairman and CEO of its cloud business. Eddie Wu, who was slated to start as CEO in September, will be filling the role of chairman and CEO of the cloud business on an interim basis, according to a statement made to the Hong Kong exchange on Sunday.
In June, Alibaba made a surprising declaration in regards to the leadership revamp, in which Zhang stepped down from his roles as CEO and chairman come September 10th in order to focus on the cloud intelligence business. Co-founder Wu would take over as CEO and director, and another co-founder Joseph Tsai, would begin his tenure as chairman from September. Zhang held the spots of both Group CEO and chairman since 2015 and 2019 respectively and acted as chairman and CEO of the Alibaba Cloud Intelligence Group since 2022. In the Sunday statement, Alibaba expressed their thanks to Zhang for his 16-year contributions to the Alibaba Group.
In May, Alibaba announced a plan to spin off its cloud division as a separate, publicly traded company. This move resulted from a major restructuring in March which divided Alibaba into six business groups, allowing each section to look for external finance and go public. Analyst Alicia Yap from Citi commented on the announcement in a report on Monday, noting that investors may be wary of how the spin-off might be impacted by its timing and process. Yet, Yap still gave a strong 'buy' recommendation of the stock and a target price of $151, which is 67% higher than its last close of $90.05 on the New York Stock Exchange. Yap warned Citi will remain attentive for any new news, and potential risks for the company such as a lack of success in implementing its retail strategy and higher than expected expenditure and margins pressure.
Zhang will still be providing his abilities to Alibaba in a new manner, as per an internal letter to personnel seen by Reuters, which apparently said Alibaba will commit $1 billion in a technology fund to be built by Zhang. Additionally, the Company has stated that it will press forward with the earlier declared rotation off of Alibaba Cloud Intelligence Group under a distinct management team to be named, provided that it is in agreement with the restructuring plan and any pertinent endorsements. With China's slowing economic climate and stricter control from Beijing, billions have been erased from Alibaba's stock market price.
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