Alibaba stock drops 10% at one point as plans for cloud spinoff are canceled – Bloomberg

China’s e-commerce giant Alibaba Group has canceled plans to spin off its cloud business unit. Alibaba blames tightening of regulations in the United States regarding cutting-edge semiconductors destined for China. The company’s American Depositary Receipts (ADRs) fell on the stock market on the 16th. It was down 10% at one point.

Alibaba initially aimed to separate its cloud services business and eventually list it on the stock market. The company said in a statement that the recent expansion of U.S. restrictions on exports of advanced semiconductors “created uncertainty about Cloud Intelligence Group’s outlook,” and that the group’s “spin-off is not proceeding with a complete spin-off, but rather a liquidation plan.” “We have decided to focus on developing a sustainable growth model under the current circumstances.”

As of 11:47 a.m. New York time, Alibaba’s ADR was $78.83, down 9.5% from the previous day. At one point, it was sold as low as $78.23.

Willer Chen, research analyst at Forsyth Barr Asia, said the announcement “should come as a big surprise to the market. It contrasts sharply with the earlier clear prospect of a spin-off,” adding, “The relatively weak market conditions Even taking this into consideration, the cancellation of the spin-off confuses the market.”

Alibaba also announced that it would suspend plans for an initial public offering (IPO) for its grocery chain unit, Hema.

Reference article:

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Original title: Alibaba Nixes Cloud Spinoff After US Blocks AI Chips From China

Alibaba Tumbles After Nixing Cloud Spinoff on US Chip Curbs

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(Update with stock prices etc.)