Why Alibaba Stock Popped Today
Shares of Chinese tech giant Alibaba (NYSE: BABA) popped on Tuesday after the company announced it is splitting into six -- yes, six -- separate companies. As of 10:10 a.m. ET, Alibaba stock was up 8%.
In its most recent quarter, Alibaba generated revenue of nearly $36 billion -- it's a massive company that does business in e-commerce, cloud infrastructure, media, financial technology, and more. However, the company's revenue of $36 billion was up only 2% from the prior-year period. And management apparently believes that splitting into six separate companies will help increase focus for each, allowing them all to perform better over time.
Alibaba's press release said that each new entity will be able to raise capital at its individual discretion, possibly including its own initial public offering (IPO). And regarding IPOs, the timing of Alibaba's announcement doesn't seem random to me. Just last month, China's government updated its policies for companies publicly listing overseas, and these rules go into effect on March 31, as reported by CNBC.
Source Fool.com
