If you've been following the news, you may have noticed that Alibaba founder Jack Ma has been making some surprising comments lately. He's made it clear that he's no longer interested in running Alibaba every day and intends to retire as soon as possible. This has caused many people to wonder if Ma still owns Alibaba, but it hasn't been clear until now whether Jack Ma still owns Alibaba stock or not.
Alibaba Was Jack Ma's Baby
The entrepreneurial power behind Chinese tech giant Alibaba is leaving his post at one of China's biggest companies. Co-founder and Executive Chairman Jack Ma are ending his formal association with Alibaba Group Holding Ltd. He told a meeting of employees. A person close to Mr Ma said he might remain affiliated with some company unit, however. The move marks an end to one of China's most storied corporate relationships—between Mr Ma and Alibaba—and it raises questions about succession planning at a company that dominates e-commerce in China and has ambitious plans to expand overseas.
Jack Ma Seems Disinterested in Alibaba Now
The 51-year-old co-founder, who recently appeared in a viral video doing a rendition of Celine Dion's My Heart Will Go On, told investors that he has become less involved with his brainchild. I feel my power is so limited—it makes me frustrated and tired, said Ma, who turned over management duties to CEO Daniel Zhang last year. Since I handed over my duties as CEO to Daniel [Zhang], I no longer have any responsibilities at Alibaba. My only job now is to be an owner. This has prompted concerns that Alibaba may lose some of its innovative cultures after years of exponential growth under Ma's oversight. Shares dropped 4% on Wednesday as a result.
How Jack Ma Could Return as CEO
No one has heard from Jack Ma since he stepped down as CEO of Alibaba. Rumours suggest that he is still active in company affairs and maintains a small percentage of ownership, but no one is sure how involved he is with his creation anymore. To return to his role as CEO, it's likely that Jack would need to take drastic action. The first step would be to purchase his shares from Yahoo, which retained around 40% of Alibaba when it sold its remaining 15% stake for $7 billion earlier this year. If, after purchasing back his shares from Yahoo, Jack took control over 75% of voting rights at Alibaba, he could legally hand over control of day-to-day operations back to himself or someone else through a shareholder vote.
Why Jack Left the CEO Role in 2015
According to Forbes, For most of [Jack Ma's] time as CEO, he served as China's wealthiest man and as its most important and influential business leader. However, his influence seems to have waned. The same piece points out that there is no excellent succession plan for stepping down, which has led many to believe that current CEO Daniel Zhang (the seventh person to hold that title) will eventually be succeeded by a Westerner. If that happens, it would undoubtedly raise questions about Alibaba's plans and how they might affect their relationship with Taiwan.
Why Are Shareholders Worried?
There are two reasons why investors are worried. Firstly, they believe that Jack is not as focused on growing Alibaba in today's global e-commerce market. Secondly, his unwavering loyalty to Yahoo, which holds a 24% stake in Alipay (Yahoo owns 40% of Alibaba's China operations). As part of its agreement with regulators during its $25 billion initial public offerings (IPO) in 2014, it was stipulated that Ma could only be CEO for one year and would not have any say or control over critical business decisions after that point. In 2015, he will be stripped of his chairman title, and then he will officially become a private citizen. Some shareholders worry that he may leave altogether after relinquishing all power.
Do Shareholders Have a Reason to Worry?
According to Bloomberg, one of Alibaba's largest shareholders, SoftBank Group Corp., is reportedly shopping around its stake in Alibaba, which could be worth as much as $15 billion. SoftBank acquired that huge position in 2012 for a mere $20 million, giving it an enormous return on investment should it ever sell—though a sale would likely have to wait until 2019, when it is scheduled to receive some of its original shares back from Yahoo! Inc. Either way, investors and company stakeholders alike should be asking why Masayoshi Son has decided to part ways with his baby: It's hard to know whether or not he wants out or if he's trying to get better terms, said SunTrust Robinson Humphrey Inc.
What Does This Mean for Investors?
We don't know. What does it mean for you and your investments? While some changes are likely coming to Alibaba, we can't say with any certainty how they will affect shareholder value. We do not own stock in Alibaba at Consumer Metrics Institute or its parent company (Alibaba Group), and we also don't have any additional insight about what might happen. But no matter what happens in China, there are a few things we can say for sure:
- The value of global e-commerce is skyrocketing.
- China has become a significant player in global e-commerce.
- For many years, e-commerce will continue to play an increasingly important role in consumer spending.
Should Investors Care About Alibaba's CEO Issues?
In addition to marking a significant drop in share price, investors are also getting increasingly worried about who will be running e-commerce giant Alibaba in years to come. (Source: Alibaba's stock drop adds to founder Jack Ma's headaches, CNBC, August 15, 2017.) While Ma officially stepped down as CEO back in 2013 and didn't have a direct stake in Alibaba anymore, he was still chairman of the board until recently—and is seen by many as being responsible for most of its success. So what does that mean for investors? Can you trust a Chinese e-commerce company if there's uncertainty over who's leading it now?
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