- Alibaba's stock dropped following reports of SoftBank, an early investor and technology investment group, planning to sell most of its remaining stake in the company. SoftBank has sold approximately $7.2 billion worth of Alibaba shares through prepaid forward contracts this year, reducing its stake in the company to less than 4%.
- Masayoshi Son's SoftBank was an early investor in Alibaba and had one of the most profitable bets in tech history. However, the group sold much of its stake last year due to the falling tech valuations. SoftBank's reported sale of the rest of its Alibaba stake comes as the company undergoes its largest restructuring yet, leaving Alibaba without the support of a significant investor as it potentially looks to spin off or list subsidiaries, such as its fast-growing cloud business.
Why it matters
Industry analysts suggest that the division of Alibaba likely received regulatory support from Beijing, which has been prioritizing competition in the tech sector. This has led to decreased valuations and prompted Alibaba's founder, Jack Ma, to re-enter the limelight. SoftBank's reduced stake in Alibaba is another change in the company's ownership structure. However, it's also possible that SoftBank is merely capitalizing on the stock's recent gains, as Alibaba's stock is up 49% since October lows, a trend seen across much of the Chinese tech industry.