Alibaba stock rises on restructuring plan - PingWest

Alibaba stock rises on restructuring plan

Alibaba stock rises on restructuring plan

Rebbeca Ren

posted on December 7, 2021 6:50 am

With Q3 revenue and earnings falling short of forecasts, the company also slashed its revenue guidance for the current fiscal year in latest financial report.

Alibaba appointed a new Chief Financial Officer on Monday and announced that it will reorganize its e-commerce business, as the tech giant faces increasing competition and slowing growth in China.

Starting next year, the company's multiple e-commerce units for the domestic market will be merged into one and a new international digital business team will be formed, the company said.

Trudy Dai, one of Alibaba's founding members and a partner who previously served as the company's chief customer officer and president of industrial e-commerce, will be the head of the domestic e-commerce line. Taobao, Tmall, the grocery-shopping platform Taocaicai, and the discount-goods app Taobao Deals, will be included in to the line.

The new international digital commerce team will focus on Alibaba's overseas expansion and will be composed of AliExpress, Alibaba.com, and Lazada. Jiang Fan, the former president of Alibaba's two major marketplace in China, Taobao and Tmall, will lead the team.

In the quarter ended September 30, international e-commerce accounted for 5% of Alibaba's revenue, while China's commercial retail accounted for 63%.

Chief Financial Officer Maggie Wu will step down and Toby Xu, currently the deputy chief financial officer, will succeed her from April 1, Alibaba said. Wu has worked at Alibaba in various roles for 15 years and will serve as an executive director on the company's board.

In a letter to Alibaba employees, Chief Executive Daniel Zhang said that the new structure is to "make the company's organization more flexible."

The restructure come as Alibaba is trading at a four-year low. Following the news, Alibaba's share price surged 10.4% on the New York Stock Exchange today to close at $123.60.

Last month, Alibaba presented its financial report for the July-September quarter, with revenue and earnings falling short of forecasts. 

The company also slashed its revenue guidance for its current fiscal year. It previously predicted 930 billion yuan in revenue, or a 29.5% year-on-year growth. However, it now anticipates year-on-year growth to range between 20% and 23%.

Despite being China's largest e-commerce company, Alibaba faces increasingly fierce competition from counterparts JD.com and Pinduoduo, as well as social media companies like TikTok's parent company ByteDance. 

In the financial report, the e-commerce giant said it has increased investment into nascent businesses this year as it looks for more growth areas and to fend off rivals.