Alibaba ADRs Plunge After It Calls Off Cloud Spinoff Amid US Chip Restrictions

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Bill McColl
Bill McColl
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Bill McColl has 25+ years of experience as a senior producer and writer for TV, radio, and digital media leading teams of anchors, reporters, and editors in creating news broadcasts, covering some of the most notable news stories of the time.

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Published November 16, 2023
Alibaba Cloud

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Key Takeaways

  • Alibaba canceled its planned spinoff of its cloud computing division.
  • The Chinese e-commerce giant said new U.S. export restrictions on semiconductors and equipment create "uncertainties."
  • Alibaba also announced its first-ever annual dividend.

American depositary receipts (ADRs) of Alibaba Group Holdings (BABA) tumbled over 9% in early trading Thursday as the Chinese e-commerce giant said that it was canceling its plan to spin off its cloud computing unit, and earnings came in lower than expected.

Alibaba indicated that it ended the move to make its Cloud Intelligence Group a separate company because of recent restrictions imposed by the Biden administration on U.S. exports of advanced computer chips and equipment to China.

Alibaba explained the export limits “created uncertainties” for the division, and its spinoff “may not achieve the intended effect of shareholder value enhancement.”

The company also released its September quarterly results, and earnings per share (EPS) of 1.95 Chinese yuan ($0.27) missed estimates. Revenue rose 9% from a year ago to 224.79 million yuan ($30.81 million), exceeding forecasts.

Alibaba also announced it would spend $2.5 billion for its first annual dividend, giving investors $1 per ADR, and $0.125 per ordinary share. The payment would be made at the close of business Dec. 21.

With Thursday's losses, ADRs of Alibaba were down more than 13% year-to-date.

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  1. Alibaba Group Holdings. "Alibaba Group Announces September Quarter 2023 Results."

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