Jack Ma Back Off Plans To Sell Shares After Alibaba Stock Tumble

Alibaba co-founder Jack Ma has decided to halt his plans to sell a significant portion of the company's stock following a recent slump in its share price.

The Chinese tech giant faced a tumultuous week, marked by the abandonment of its $11 billion cloud business spin-off plan, resulting in a sharp decline in the company's stock value, as per to Business Insider.

Alibaba Stock Sale Amid Market Worries

(Photo : PHILIPPE LOPEZ/AFP via Getty Images)
Jack Ma, CEO of Chinese e-commerce giant Alibaba, speaks during his visit at the Vivatech startups and innovation fair, in Paris on May 16, 2019.

The decision to halt the stock sale, which was set to take place on November 21, came after Alibaba's stock price experienced a significant drop, wiping out an astounding $26 billion in value over just two days. Ma's family trust had intended to sell 10 million American Depositary Shares (ADS) of the company, amounting to a total value of $870 million.

The regulatory filings for the planned sale were made public on Thursday, further exacerbating concerns among investors and employees alike. According to reports from Reuters, the company's employees were apprehensive about Ma's move, fearing its potential impact on the company's stability.

However, Alibaba sought to reassure its staff with an internal memo affirming that Jack Ma had not sold a single share of the company. The memo, reportedly issued by Chief People Officer Jane Jiang Fang, stated, "Ma's office has issued a statement saying that Ma will continue to hold onto his Alibaba stake.

This is a fact and not mere lip service." Jiang also disclosed that the funds from the proposed stock sale were intended for investments in agriculture and charitable causes.

One of the central reasons provided for Ma's decision to hold off on selling the stock was the belief that its current market value did not reflect its true worth. In the internal memo, Jiang emphasized that the timing of the disclosure was purely coincidental and had led to a "severe misunderstanding" among investors.

The timing of Ma's decision couldn't have been more unfortunate, as it coincided with a substantial decline in Alibaba's share price.

Following the company's decision to abandon the spin-off and listing of its $11 billion cloud business unit due to increased US restrictions on chip sales to China, Alibaba's stock plunged by 9% during New York trading, according to Yahoo News.

Jack Ma's Wealth Drops $683M Amid Alibaba Stock Turmoil

As a result of this stock market turmoil, Jack Ma's personal wealth experienced a staggering decrease of $683 million. His net worth, as reported by the Bloomberg Billionaires Index, now stands at $29.2 billion, while the company's Chairman, Joseph Tsai, suffered a loss of approximately $261 million.

Ma's intention to sell 10 million shares worth approximately $870 million was disclosed in regulatory filings on November 16, coinciding with Alibaba's release of its September quarter earnings report.

However, these plans had been in motion since August when Alibaba's US-listed shares were trading much higher than their current value. The recent closing price of Alibaba's shares at $78.94, compared to their peak of $101 in August, resulted in a considerable decrease in the potential proceeds from Ma's stock sale.

Jane Jiang emphasized that Ma's decision to delay the stock sale was a testament to his confidence in Alibaba's long-term prospects, as he aims to capitalize on a higher selling price in the future.

Amid these developments, Alibaba and its co-founder, Jack Ma, have been under increased scrutiny from Chinese authorities, in the course of an extensive crackdown on the country's technology sector, aimed at curbing the influence of domestic tech giants.

While Ma has stepped away from his roles at Alibaba since 2020, he remains a significant figure in the tech industry, balancing his time between business and his pursuits in teaching and research, particularly in the field of agricultural science.

Alibaba itself has undergone significant changes this year, including a restructuring into six distinct business groups and a change in its CEO, reflecting the dynamic nature of the ever-evolving technology landscape in China and around the world, CNBC reported.