The market value worth $21bn of Alibaba Group was on Friday wiped out by investors after the company abandoned plans to spin off its cloud division.
The company cited concerns about U.S. restrictions on chip exports to China for artificial intelligence applications.
The 10% closing decline in Alibaba Group’s Hong Kong shares was the company’s largest one-day loss in over a year.
Following the shocking strategic reversal that was published late on Thursday, the company’s U.S. listed securities closed down 9%. This was the first market reaction in Asia.
At its height in October 2020, Alibaba’s stock value was over $830 billion, making it the most valuable stock in Asia. However, due to the e-commerce company’s prominence in Beijing’s technology sector crackdown, its current valuation is less than 25% of its previous value.
The most recent Alibaba news highlights other significant challenges that China’s tech companies face, including the difficulty in obtaining essential semiconductor supplies from American companies due to export restrictions.
Alibaba divided into six divisions in March, announcing plans to separate the cloud division as part of the largest reorganisation in the company’s 24-year history.
The Hangzhou-based company postponed its plan to float its Freshippo grocery business when it announced its quarterly earnings on Thursday.
