One of the most well-known Chinese companies, Alibaba, is about to become six well-known Chinese companies. The e-commerce giant announced that it is going to split into six independent units soon – and its stock celebrated this fact with 14% growth. But when shares show this kind of moonshot, this poses the question – is it too late to buy them?
Alibaba enriched its market value by about $33 bln after investors got the news that the company would split into six separate firms with their own CEOs and boards. All the units will be responsible for different lines of business. So, meet the newbies – Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group, and Digital Media and Entertainment Group. Each one of these future companies is quite capable of becoming public at some time.
If you have Alibaba stock in your portfolio, you can probably look at the chart below till the crack of doom. Although, news and releases from companies are not the only things that influence the market. They can also be affected by various economic events planned well in advance. In order to stay on top of these events and make changes to your portfolio accordingly, you can utilize different trading tools, such as the economic calendar – it shows all the significant events that investors and traders need to know.
Not all details about the future split have been made clear so far, but many analysts believe that Alibaba papers hold promise. There are two key factors. Firstly, experts believe that shares may be undervalued now, and the reorganization will help to re-evaluate every company separately, in a meaningful way.
Moreover, comparatively small companies are likely to be more flexible and will be able to react more quickly to the market, economic, and regulatory changes.
Another factor is China's regulatory policy. In the past few years, large Chinese companies have been under pressure. Large-scale and long-term inspections have severely besieged the shares of Alibaba, as well as the rest of the Chinese stock market. But there is hope that this period is coming to an end, taking with it the Covid-19 restrictions.
Even after an explosive 14% increase, analysts have outlined an impressive target price for Alibaba stock. The consensus forecast is +45% over the next 12 months.
But don't forget that markets change every week, day, and hour. That's why you need to do your own research before every trade. That's the key to success.
