Alibaba's Troubles: Who wants to catch Jack Ma’s falling knife?

While Ma is no longer actively involved in Alibaba’s operations, his decision to sell is a chilling reminder that the firm doesn’t have a controlling shareholder at the top, just when billions of dollars need to be spent to move into new fields such as generative AI. Earlier this year, SoftBank Group Corp, which once owned a third of Alibaba, sold much of its remaining shares. According to Alibaba's filings, as of July, SoftBank was listed as the only stakeholder with more than 5 percent beneficial ownership.

Investors are left wondering who will be held accountable for all the checks Alibaba will need to write. In China, it is rare for such a big corporation to attempt ground-breaking transformations without a major stakeholder. In fact, a few that tried ended up bankrupt.

Tsinghua Unigroup Co, a commercial arm of the prestigious Tsinghua University, is a good example. The company, a crown jewel of President Xi Jinping’s “Made in China 2025” plan, had been trying to establish itself as the leader in China’s nascent memory-chip industry since 2015. By 2019, Yangtze Memory Technologies Co, its flagship flash-memory business, already spent more than 20 billion yuan ($2.5 billion) on a new plant in Wuhan and earmarked $30 billion in total spending. Meanwhile, the university made several attempts to disentangle itself from the company, aware that chip manufacturing was an expensive, capital-intensive endeavor. Unigroup defaulted on its bonds in 2020 and entered bankruptcy proceedings the year after.

To be sure, given that Ma has already stepped away, a reduction in his stake was just a matter of time. But the optics are terrible. Alibaba is going through a rough patch, having chosen to replace much of its C-suite and undertake a major business revamp. Having the man who started it all look like he’s nonchalantly walking away is the polar opposite of the confidence boost management and shareholders need right now. 

At the height of his powers, Ma dressed as Michael Jackson and danced to the tune of Billie Jean. Today the music has stopped — he’s selling his shares and watching the company seemingly fall apart. This can't have been what China's once-richest man imagined for his empire.

Shuli Ren is a Bloomberg Opinion columnist. Views do not represent the stand of this publication. 

Credit: Bloomberg