Alibaba’s Planned Cloud Spinoff Disappears In A Cloud Of Smoke

Not for the first time, Alibaba(BABA) graces our pages with news of a cancelled spinoff. Back in 2015, it was Yahoo’s planned spinoff of Aabaco Holdings that was cancelled, due, in large part, to IRS opposition to the transaction being tax free. Aabaco would have been a vehicle to take Yahoo’s valuable Alibaba stake and move it into an independent holding company. Now, Alibaba has cancelled its spinoff of its cloud business.

Cloud Intelligence Group The recent expansion of U.S. restrictions on export of advanced computing chips has created uncertainties for the prospects of Cloud Intelligence Group. We believe that a full spin-off of Cloud Intelligence Group may not achieve the intended effect of shareholder value enhancement. Accordingly, we have decided to not proceed with a full spin-off, and instead we will focus on developing a sustainable growth model for Cloud Intelligence Group under the fluid circumstances.

Once again, a US regulator has derailed an Alibaba related spinoff. Alibaba has had its share of challenges from the Chinese government as well. Alibaba has other spinoffs in progress as well, including one on hold.

Alibaba International Digital Commerce Group

Alibaba International Digital Commerce Group is in preparation for external fundraising.


Cainiao Smart Logistics Network Limited has applied for an initial public offering in Hong Kong and has submitted its A1 filing to the Hong Kong Stock Exchange.

Freshippo (Hema)

Freshippo (Hema)’s plan for an initial public offering has been put on hold as we evaluate market conditions and other factors that would contribute to a successful transaction to enhance shareholder value.

Alibaba may be a fantastic business. It perpetually appears undervalued. However, the uncertainty inherent in China-based businesses and the risk of further American regulations make this one to avoid. Over and over again, US investors have found that they don’t own exactly what they thought they did. Maybe it’s a little too soon to say this about a stock Charlie Munger was bullish on the day after he died, but, perhaps the best tribute is to, like Charlie did, bluntly tell it like we see it. Alibaba is unsafe at any price.

Disclosure: The author holds no position in any stock mentioned.