Alibaba’s Sensational Divestiture – How Much is the Group’s Value?

Alibaba’s (BABA) shares keep rising on the news of the company’s divisions’ split-up, but, contrary to common speculation that the move was due to the Group’s precarious financial situation, in reality, it demonstrates exactly the opposite. Some analysts by using parts of a whole business valuation method suggested the value of all business groups combined may be as high as $450 billion.

Alibaba plans to create 6 major business groups, each with its own CEO and board of directors. The groups are Cloud Intelligence, Taobao Tmall, Local Services, Global Digital Business, Cainiao Smart Logistics, and Digital Media and Entertainment. These groups will have the flexibility to raise outside capital and potentially pursue their own IPOs, except for Taobao Tmall, which will remain wholly owned by Alibaba Group.

Alibaba's Cloud segment revenue in Q4 2022 was RMB20,179 million (around $2,950 million), posting a 3% increase YoY. The increase was mainly due to strong growth in public cloud revenue, although revenue from customers in the Internet industry declined by 4% due to dwindling demand from some customers for overseas cloud services.

The revenue from Alibaba's Taobao Tmall Business Group, the China Commerce retail business, in Q4 2022 was RMB165,765 million ($24,034 million), a 1% decrease from the same quarter in 2021.

In the last quarter Alibaba's revenue from Local Consumer Services, was RMB13,164 million ($1,909 million), showing a 6% increase compared to RMB12,466 million in the same quarter of 2021.

The International Commerce Retail business experienced a particularly sound growth in Q4 2022, with revenue increasing by 26% YoY to RMB14,644 million ($2,125 million).

In Q4 2022, Cainiao's revenue from China domestic and abroad logistics services and supply solutions was up 27% from the same period last year to RMB16,553 million (around $2,400 million).