Alibaba: Concerns Over Disagreement Among Leaders Raised After Surprising Management Shuffle

According to an Alibaba internal letter from chairman Joe Tsai, Alibaba CEO Eddie Wu will succeed Daniel Zhang as the chairman and CEO of Alibaba Cloud Intelligence Group, or Alibaba Cloud. This is surprising as Zhang resigned from Alibaba as the chairman and CEO in June while keeping the Alibaba Cloud chairman and CEO roles. We think this latest change was not planned back in June and there are concerns of disagreements among Alibaba’s partners. We have mixed thoughts on this news but we are comfortable in maintaining our forecasts and fair value estimates for Alibaba. While we think the shares are undervalued, the near-term share price performance may be muted, as the pace of unlocking the value of Alibaba through potential listings of its units could be postponed, with the reported delay of Freshippo’s IPO due to low valuation.