Alibaba stock rockets 14%, Wall Street cheers company's split up plan
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Alibaba (NYSE:BABA) shares surged more than 14% Tuesday as investors showed their enthusiasm for the Chinese e-commerce giant after it said it would split into six different units with a goal of boosting each group's individual business value.
Prior to the start of trading, Alibaba (BABA) made it plans public in a Securities and Exchange Commission filing. The company said the six groups would be Cloud Intelligence, Taobao Tmall Business, Local Services, Global Digital Business, Cainiao Smart Logistics and Digital Media and Entertainment.
"Under this plan, will have six major business groups and other investments, each to be independently managed by its own chief executive officer and board of directors," Alibaba said in its regulatory filing.
The company added that, aside from Taobao Tmall Business, which will remain fully owned by Alibaba (BABA), each of the other business groups "will also have the flexibility to raise outside capital and potentially to seek its own IPO."
Barclay's analyst Jiong Shao called Alibaba's (BABA) six-way split-up plan "a significant step towards shareholder value creation," and could end up far exceeding the company's current valuation. 
"We had been hoping Alibaba would spin off certain highly valuable [subsidiaries]," Shao said. "But this master plan to split the company into six units may be even better."
With Tuesday's gains, Alibaba's (BABA) stock climbed to as high as $97.76 a share, its best level in more than a month. Shao left his $141-a-share target price and overweight rating on Alibaba (BABA) unchanged.
Seeking Alpha contributor Jonathan Weber agreed with Shao, and called Alibaba's (BABA) plans "a bombshell" that in addition to opening up more value for shareholders "might also reduce regulatory risks going forward."
Alibaba's (BABA) announcement came a day after the company's legendary founder, Jack Ma, made his first appearance in mainland China after several months overseas. Ma has largely avoided visiting his home country for more than two years since he gave a speech in late 2020 in which he criticized Beijing's financial and business regulators.
With Alibaba (BABA) leading the way, other Chinese tech stocks rose in tandem with their national brethren. Tencent Holdings (OTCPK:TCEHY) stock rose 6%, NetEase (NTES) was up by 2%, Weibo (WB) shares climbed almost 5%, BiliBili (BILI) edged up by 2% and JD.com (JD) rose 3%.
The KraneShares CSI China ETF (KWEB) was also up by more than 3%.
Meanwhile, Baidu (BIDU) stock rose almost 4% one day after the Chinese Internet search leader cancelled an event where it was to show off its new AI technology, called Ernie Bot.