From Breakingviews - E-commerce can be open sesame to Alibaba's worth
faster-growing, money-losing bets like its cloud and logistics units. But valuing them is more art than science. Boss Daniel Zhang may get more bang for his breakup bucks by convincing investors its main shopping business can still grow.
Before last week's proposed six-way carve-up, Alibaba’s market capitalisation was $228 billion, or 10 times the roughly $23 billion of net profit Bernstein analysts reckon its main commerce unit will generate in the fiscal year to March 2024.
Hiving off businesses should help maximise value obscured by the sprawl. The cloud-computing division, for instance, posted an operating loss of 1.5 billion yuan in the three months to December but is considered one of the company's more promising ventures. It accounted for 9% of Alibaba's top line in the nine months to December, nearly double five years ago.
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