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Dark side of Alibaba Group

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When Alibaba Group got listed in NYSE in 2014, the IPO was considered an earth-shattering event among investment community. At that point, the market valued the e-commerce conglomerate at a staggering USD231 billion. While many investors salivated at the massive prospect of Alibaba Group, it is important to pay attention to the downside risks as well.

With a name based on legendary folklore, Alibaba Group’s rise to global prominence is nothing short of fairy-tale. Widely touted as the China’s answer to Amazon, can Jack Ma’s team fulfil their destiny?

A whole new world

Indeed, Alibaba Group share price didn’t fail to live up to its initial hype, surging from strength to strength to reach the incredible height of USD210 in June 2018. Back then, the sky is really the limit for this e-commerce giant as investors cheered the berserk run of Alibaba Group share price. Immense wealth has been created and many people became insanely rich overnight as Alibaba Group share price stormed to unchartered waters.

Alibaba Group

The recent trade war between United States and China has installed some form of sanity on Alibaba Group share price. But then again, will this trade dispute be able to hold the leash on the charging form of Alibaba Group share price for long? After all, the management is confident about the growth story and has embarked on aggressive shares repurchase program recently. As of November 1, 2018, Alibaba Group had repurchased approximately 9.12 million of their shares for a total purchase price of approximately US$1.33 billion.

For sure, the growth prospect of Alibaba Group is well-documented and there is absolutely no doubt about the tremendous growth of e-commerce in the huge Chinese market. But before investors get carried away, it is important to keep cool and assess the corporate governance of Alibaba Group.

Great Wall of Alibaba Partnership

Alibaba Group adopt very unique corporate governance in the form of “Alibaba Partnership” – a mysterious elite group of leaders within the Group. Many investors thought that this corporate structure is akin to “dual-class structure” which is adopted by many technology companies like Facebook. In my point of view, this is not true. What is this Alibaba Partnership all about and what is the difference to this governance structure vis-à-vis dual-class structure?

When Jack Ma chose to list Alibaba Group in NYSE instead of Hong Kong Stock Exchange, many people were surprised [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: December 19, 2018 — 8:11 am

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