Alibaba (NYSE:BABA) Group Holding Ltd. saw its shares surge by over 5% on Friday following the announcement of plans for an initial public offering (IPO) of its shipping subsidiary, Cainiao, in Hong Kong. The news comes amidst a persistent downward trend for the company's stock since July 31.
Cainiao is aiming to raise at least $1 billion from its IPO, although the total valuation of the company remains undisclosed. The announcement led to a 4% surge in Alibaba's stock in Hong Kong. Cainiao operates as Alibaba's global delivery and shipping arm for its primary e-commerce operations, including AliExpress and Lazada. It was established internally by Alibaba, an e-commerce giant founded by Jack Ma.
In March, Alibaba's management unveiled a strategy to divide the conglomerate into six independently operating businesses, most of which are expected to eventually go public through their own IPOs. However, plans to spin off its Freshippo supermarket unit were shelved due to concerns the market was not ready for consumer-focused businesses amidst a challenging economic climate in China throughout 2023 characterized by stagnating growth.
As early as June, Alibaba and Cainiao had already begun discussions with Citic Securities, Citigroup (NYSE:C), and JPMorgan Chase (NYSE:JPM) regarding a potential IPO.
Despite these recent developments and the surge in stock prices following the IPO announcement, Alibaba's stock has struggled to break the $101 to $103 resistance band since July 31. The 9-day Simple Moving Average (SMA) has been trading below its 21-day counterpart since September 5, signaling a bearish outlook for the stock.
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