BABA Falls Premarket After Ma’s Trust Announces Selling 10M Shares

Shares of Alibaba (NYSE: BABA) fell 7.9% in Thursday premarket trading after regulatory filings revealed that the family trust of Jack Ma, the company’s founder, is planning to sell 10 million of its US-listed shares. Alibaba also announced it will not fully spin off its cloud business due to recent chip restrictions imposed by the US government. The e-commerce firm’s shares tumbled more than 7% in the premarket. 

Jack Ma’s Family Trust to Sell $871M of US-listed Alibaba Shares

Jack Ma’s family trust is poised to dump 10 million American Depository Shares (ADS) of Alibaba group for $871 million, the e-commerce giant revealed in new regulatory filings. 

The sale is set to be executed on November 21 by JC Properties and JSP Investments – two funds that belong to the family trust. Alibaba’s US-listed shares fell 8.2% ahead of the market open on Thursday.

The move was announced alongside Alibaba’s latest quarterly report, revealing certain headwinds that weighed on the company’s stock price.

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Alibaba Reports Q2 Earnings, Will Not Spin-Off Cloud Unit

In its financial results for the fiscal Q2 2023, Alibaba reported a net income attributable to shareholders of 27.7 billion yuan ($3.8 billion) for the September quarter, missing the consensus projection of 29.7 billion. 

Revenue came in at 224.79 billion yuan ($31 billion), meeting analysts’ expectations and up 9% from a year earlier. Moreover, Alibaba announced its first-ever annual cash dividend in 2023. The e-commerce behemoth said its board approved a $0.125 per ordinary share or $1 per American depositary share (ADS) cash dividend for the fiscal year.

Among the highlights of the Q2 report was Alibaba’s announcement that it would not continue with the full spin-off of its cloud unit, citing US chip export restrictions. The Chinese company initially planned to list its Cloud Intelligence Group publicly. Still, it made a U-turn after recent US chip restrictions made it harder for China-based companies to obtain key chip supplies from the US. 

Alibaba said the constraints “created uncertainties for the prospects of Cloud Intelligence Group.” Last month, the US government banned selling Nvidia’s high-end AI chips H800 and A800 to China. The move may force the company to cancel $5 billion worth of AI chip orders. 

Do you think the recent chip restrictions will continue to weigh on Chinese tech stocks? Let us know in the comments below.