Alibaba shares crash 4% as former CEO quits cloud business
Alibaba Group's shares fell over 4% following the unexpected exit of former CEO Daniel Zhang from the company's cloud computing business. Zhang had been leading both the group and the cloud intelligence unit, and was set to focus solely on the cloud division. The unit is China's largest cloud provider, holding a 34% market share and housing Alibaba's research arm, DAMO Academy.
Eddie Wu steps in as acting CEO
In an internal letter to staff seen by Reuters, Alibaba announced Zhang's decision to leave the unit. Co-founder Eddie Wu has stepped in as acting CEO and chairman. Zhang also handed over his group CEO role to Wu on Sunday. Li Chengdong, head of e-commerce focused Haitun think tank, believes Zhang's departure is a personal decision amid growing competition and a tighter regulatory environment.
Cloud unit's listing plans to remain unaffected
Chengdong does not see Zhang's departure significantly affecting Alibaba Cloud's listing plans, as it depends on the unit's business performance. Analysts estimate the cloud unit to be worth $41 billion to $60 billion but warn that its vast data oversight could attract regulatory scrutiny. Alibaba plans to continue the spin-off under a separate, yet-to-be-appointed management team.
Zhang will continue contributing to the company
Alibaba stated in its letter that Zhang will continue contributing to the company by "channeling his expertise differently." The e-commerce giant said that it will invest $1 billion into a technology fund that Zhang would establish. Vey-Sern Ling, Managing Director at Union Bancaire Privee, sees this development as positive, allowing Alibaba and the cloud business to start with a "clean slate." Following the news of Zhang's exit, Alibaba's stock fell 4.4% to HK$86.85, its lowest since August 2023.
