Cloudy Forecast

Cloudy Forecast

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  • Alibaba plans to spin off its cloud division as a separate, publicly traded company. However, their quarterly revenue of 208.2 billion Chinese yuan ($29.6 billion) was slightly below expectations. Despite the initial drop, Alibaba shares rose by 2.5% as investors reacted to the results and spinoff plans. Non-GAAP diluted earnings per share were 1.34 yuan, up 35% year-on-year, but lower than the expected 2.08 yuan.

  • Alibaba's latest report marks its first since the company split into six units, coinciding with China's reopening. They plan to spin off their cloud division and seek to compete with US giants like Amazon and Microsoft. Analysts view the cloud spin-off as a smart move, and Alibaba also aims to raise funds for its digital commerce group and launch an IPO for Cainiao Smart Logistics. Additionally, the company is exploring the listing of its Freshippo retail business.

Why it matters

After a period of strict regulatory measures, China's tech industry is experiencing a relaxation as Beijing's enforcement becomes more predictable. This has led some investors to anticipate a robust rebound for Chinese tech giants. Michael Burry, known for his role in "The Big Short," recently increased his investments in Chinese e-commerce companies Alibaba and He doubled his stake in Alibaba to $10.2 billion and raised his holding to $11 million.


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