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.