Alibaba (BABA) announced that CEO Eddie Wu will directly lead the company's core domestic online shopping business. The move comes as the company faces increasing pressure from rivals such as PDD Holdings (PDD).
Yahoo Finance's Brad Smith and Josh Schafer explain the details.
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video transcript
Brad Smith: We're keeping an eye on Alibaba's stock price today after announcing further changes. The company's chief executive officer, Eddie Wu, will now focus on its e-commerce business as it looks to find growth drivers amid increasing competition from rivals such as Pinduoduo. Stocks are up about 1/10 percent here this morning.
Josh Shafer: Yes, you saw yesterday that Alibaba was actually down about 2%, and it's actually up a little bit on this one. And I think it's time to zoom out and look at Alibaba stock over the year. The stock price has fallen about 20% since the beginning of the year, and the company is looking for some kind of new catalyst.
You mentioned Pinduoduo, Brad. It's a company that's growing its sales, it's growing its online sales, it's growing its online sales a lot. Essentially people feel that they are trying to take market share away from BABA. And we are referring to the public Pinduoduo. You can also mention privately held companies, right? Consider Shein, which is growing tremendously in Asia. Clearly, this is a company that could soon enter the market. Temu is also a fairly large retail company and growing.
So I think investors are probably a little happy to see the company saying, OK, we need to change something here. Put someone else in charge and see if you can make something different happen. I'll also be responsible for the cloud division, which includes AI, and I know I have to do something with AI.
Brad Smith: Well, 100%. This morning, I received a call from Jefferies, which rates the stock as a buy, and said that BABA has announced that group CEO Eddie Wu will become CEO of TTG. We expect Eddie's leadership to further leverage synergies and drive AI innovation. That was basically half the headline they put in the memo as well.
The bottom line is that there is widespread bullishness on Alibaba, at least for now, among some analysts who cover the company's name.
Josh Shafer: That's right.