Alibaba Group Holding is radically shaking itself up, which is sending shares higher. Amazon.com and Alphabet , Google’s parent, may want to take note of the plan and the stock’s reaction.
Tuesday, the Chinese internet company unveiled a new organization structure. The company is arranging itself into six business units, each with an independent board of directors and CEO. The six include cloud intelligence; internet retail; mapping; transactions; logistics; and digital media, including Alibaba Pictures.
Alibaba “gives a boost and positive signal to other big tech companies that they can also explore and consider breakup of their segments to create value,” said Jim Osman, founder of The Edge Research. The Edge specializes in corporate spinoffs and corporate transactions. “If done successfully, Alibaba would stand as a great example for the conglomerates on value creation,” he told Barron’s.
Osman said that in a breakup scenario, Amazon Web Services and the rest of Amazon together could fetch about $200 in a couple of years. Amazon stock is currently a little below $100 a share and off about 50% from the record level of almost $189 reached in the summer of 2021. Alphabet (GOOGL) is also on Osman’s list of potential breakup candidates. It “faces continual antitrust scrutiny due to its role as a dominant player in the advertising market,” said Osman. He believes the company should consider spinning out YouTube first “to create value for shareholders and avoid unnecessary antitrust attention.”
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