Alibaba Stock Is Falling. The Breakup Bounce Has Faded. – Barron’s

Alibaba Group shares were falling on Friday as the market digested its earnings. Excitement over its plans to spin off a series of its units have been undercut by concerns over its cloud-computing business.

Alibabas (ticker: BABA) American depositary receipts (ADRs) were down 2.1% in Fridays premarket to $83.96. That leaves them trading at roughly the same level they were before Alibaba detailed its plans to split itself into six units in late March, which sent the ADRs above $100.

It...

Alibaba Group shares were falling on Friday as the market digested its earnings. Excitement over its plans to spin off a series of its units have been undercut by concerns over its cloud-computing business.

Alibaba s (ticker: BABA) American depositary receipts (ADRs) were down 2.1% in Fridays premarket to $83.96. That leaves them trading at roughly the same level they were before Alibaba detailed its plans to split itself into six units in late March, which sent the ADRs above $100.

It was a similar story in Hong Kong trading, where Alibaba shares fell 6% and are now down 4.4% for the year so far.

The Chinese technology companys first-quarter earnings on Thursday were initially well received. However, analysts subsequently focused on a disappointing performance in the prized cloud division, where revenue fell 2% from the same period a year earlier.

Both Alibaba and rival Tencent have announced price cuts for their cloud-computing services amid weak corporate demand and excess capacity, which has plunged the industry into a price war, wrote Sergio Avila, a market analyst at IG, in a research note.

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Write to Adam Clark at adam.clark@barrons.com

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Alibaba Stock Is Falling. The Breakup Bounce Has Faded. - Barron's