Alibaba is facing the reduction of holdings by the giant Softbank: an analysis of development difficulties and cooperation prospects

Alibaba Group is a well-known Internet industry giant in China. The gradual development of the group's business has extended to various industrial fields in China, and its position in the Chinese market is also significant. However, what deserves our attention is that the development of Alibaba Group in the past two years could have been better.

Former director Jack Ma also retired due to insufficient public opinion. Some time ago, it was reported that Alibaba Group had sharply reduced its employees by 140 million, which also made Softbank reduce its holdings of Alibaba stocks. Is it the best time for Softbank to reduce its holdings now?

The business scope of Alibaba Group is comprehensive, and the scale of the entire group is also immense. Naturally, such an enterprise cannot be a sole proprietorship. Do you know who the most significant shareholder behind Alibaba is? The answer is a Japanese software bank. Since the beginning of Alibaba at the end of the last century, Masayoshi Son of the Japanese Software Bank has invested in Alibaba.

According to relevant market statistics, Sun Zhengyi invested a total of 20 million US dollars in Alibaba at first. In the following years, Japanese software banks added a large amount of investment to Alibaba, totaling hundreds of millions of dollars, becoming Alibaba's largest shareholder. Still, even this major shareholder has recently begun to reduce its stock holdings.

Since the end of March this year, the Japanese software group has begun to pre-sell the shares of Alibaba Group. As of now, the Japanese software group has sold a total of 213 million shares of Alibaba shares. From the data point of view, such a vast number of stocks has already accounted for 1/3 of the shares held by Japan Software Bank.

The reason why Japan Software Bank reduced its holdings of Ali stocks is actually that Ali's recent development trend could be better. At the end of March this year, Alibaba Group announced its performance report for the first quarter. Judging from the data, Alibaba's single-quarter revenue can only reach about 200 billion yuan, and its net profit accounted for less than 1/7.

Compared with the same period last year, this data set has dropped by about 30 percentage points, and it also revealed the news of a sharp drop in employees within the group. As of today, the total number of Alibaba employees has decreased by nearly 14,000. This news is naturally not good for shareholders, so Japan Software Bank has to reduce its holdings of Ali's stock.

In addition, in August "Fortune" magazine released a list Softbank ranked first in the loss list. SoftBank's first-quarter performance report for the 2022 fiscal year showed a net loss of approximately 3.16 trillion yen, exceeding the record for the most extensive single-quarter loss of 1.7 trillion yen in the previous quarter. Under the considerable loss, the only way to recover blood is from Ali.

But what deserves our attention is that the stock price is already low due to the unfavorable development of Alibaba in the past two years. Is it the best time for Japan Software Bank to choose to reduce its holdings now? Will it lead to investment losses? Many market institutions have answered this question.

Although Alibaba's current stock price is low, the recent reduction of Japanese software banks can also earn corresponding profits. After all, Japanese software banks have already started investing in Alibaba since its inception. Even though Alibaba's current stock price is low, but still much higher than when it was just getting started.

By selling Ali's stock, Japan Software Bank has cashed out a total of 150 billion in cash, which is 3,000 times the amount they invested, and the rate of return is already very high. Therefore, the reduction of Ali's stock has no adverse effect on Japan Software Bank. SoftBank's investment revenue may continue to decrease unless we wait any longer.

Judging from the above content, Japan Software Bank has significantly reduced its stake in Alibaba Group, but one point deserves our attention. Possibility of repurchasing these shares within the year. This also means that Japan's Softbank still holds a wait-and-see attitude toward Ali's current development status. There is also news that Softbank's sale of shares is to alleviate the current debt crisis. All kinds of information indicate that the long-term cooperation between Soft Galaxy and Alibaba will not end, and there may be a turning point in the future.

The development situation of Alibaba could be better. The market revenue has decreased, and the number of employees has dropped sharply. Such actions by banks will also exacerbate the flight of capital from Alibaba Group.